Wakeriding the Fannie ‘n’ Freddie Meltdown
A good number of bills have been introduced this week to distribute blame and respond to the financial crisis triggered by the failure of the government-sponsored home mortgage enterprises.
“Wakerider” legislation – bills that follow the headlines – deserve some skepticism because the time is ripe for political posturing and other silliness, but some of the bills coming forward might be good.
From the posturing department, there’s H.R. 6987. It would require corporate officers of companies to repay their bonuses during years in which their companies are subject to a taxpayer bailout, and the two preceding years as well.
Fine. We get it. Corporate compensation is high. But even the millions and millions paid to corporate executives is an infinitesimal fraction of the losses at stake in the financial crisis.
Maybe the public needs this symbolism, but I’d rather see Congress put its energy into getting its own house in order. It will be spending hundreds of billions of dollars without oversight this week or next (beyond the financial services bailout money) simply because it didn’t follow regular processes for budgeting and allocating its own spending this year.
From the “Hurry! Close the barn door!” department, there’s H.R. 6853 and S. 3547. The House bill would establish a Nationwide Mortgage Fraud Task Force Act in the FBI. The House passed it on Monday. The Senate bill would create a Nationwide Mortgage Fraud Coordinator.
Hmmmm. What about having a “Countrywide” Mortgage Fraud Coordinator to look into the sweetheart mortgage deals some Senators were allegedly getting from that firm? – but that was news a few months ago, wasn’t it. We’ve all forgotten. (Someone hasn’t: S. 3542 was introduced yesterday to require full disclosure of the terms of home mortgages held by Members of Congress.)
From the “Wha’ happan’?” department, there’s H.R. 6990. It would establish an independent Fannie Mae and Freddie Mac Investigative Commission to investigate the officers and directors at Fannie Mae and Freddie Mac responsible and the decisions that led to the enterprises’ financial instability.
If this thing goes, it had better look at the policy – the implied government backing to these behemoths. The ‘public-private partnership’ – so often such a celebrated concept – is why we’re paying such a huge price now. Maybe “public-private” will come to be recognized as “public losses, private profits.”
And from the “This May Make Some Sense” department, there’s H.R. 6986, which would raise the maximum Federal deposit insurance coverage to $200,000. This seems to update the amounts covered by federal deposit insurance not in response to the crisis, but in response to the possibility that it could be needed. Nice to see someone possibly getting ahead of the curve, rather than following along behind it. But I have to say “least bad” is not high praise . . .