Monday, December 28, 2009

When caught in a fraud, settle out of court

Which is really what is happening here:

"The Treasury Department announced Dec. 24 that the two mortgage-finance companies, which were seized by the U.S. almost 16 months ago, could tap an unlimited amount of capital for three years, up from as much as $200 billion each. It reworked caps on Fannie Mae and Freddie Mac’s mortgage-asset portfolios to require the holdings to fall to $810 billion each by Dec. 31, 2010, rather than about $690 billion."

The aggregate taxpayer somewhere in the past agreed to backstop Congressional involvement in the mortgage industry. That promise is now being kept by the aggregate taxpayer. If I were an aggregate taxpayer I would seriously think before I off-handedly issue block insurance promises.

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