Relief Without Limits: Fannie Mae, Freddie Mac Get Blank Checks; NYT Provides Blank Coverage
On Thursday, the Treasury Department issued a press release, called “Update on Status of Support for Housing Programs.” Its fourth paragraph reads as follows:
At the time the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship in September 2008, Treasury established Preferred Stock Purchase Agreements (PSPAs) to ensure that each firm maintained a positive net worth. Treasury is now amending the PSPAs to allow the cap on Treasury’s funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.
Translation: No matter how badly things further deteriorate at these former government sponsored enterprises, both of which since last year in essence have become government-controlled enterprises, Uncle Sam (i.e., current and future generations of taxpayers) will cover their losses.
Here is how three different news outlets headlined this Treasury/Obama administration move:
&lt;a href=”http://harvest.AdGardener.com/noscript.aspx?s=16&amp;c=fa99ab07-42c2-43e0-abfb-b47f96e4b9b9″ target=”_blank”&gt;&lt;img src=”http://harvest.AdGardener.com/noscript.aspx?s=16&amp;w=336&amp;h=280&amp;c=fa99ab07-42c2-43e0-abfb-b47f96e4b9b9″ width=”336″ height=”280″ border=”0″ /&gt;&lt;/a&gt;
- Wall Street Journal, Dec. 26 — “U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy.”
- Associated Press, Dec. 25 — “Treasury removes cap for Fannie and Freddie aid.”
- New York Times, Dec. 24 (in Christmas print edition on Page B1) — “New Aid for Fannie and Freddie.”
It really is difficult to take the Times seriously any more.
James R. Hagerty and Jessica Holzer at the Journal and the AP’s J.W. Elphingstone identified why the move was made just before year-end, and noted the attention-avoiding Christmas Eve timing of the announcement:
(WSJ, 4th and 8th paragraphs) “The timing of this executive order giving Fannie and Freddie a blank check is no coincidence,” said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed “to prevent the general public from taking note.”