You want to be counted among those Americans who are absolutely appalled by the bailout of mortgage giants Fannie Mae and Freddie Mac. You think that the collective hissy fit is appropriate. Why should you — Ms. law-abiding taxpayer — foot the bill for others’ bad decisions and mismanagement? You have enough dealing with the consequences of your own mistakes.
Sure, you know federal officials claim this will help the country, including homeowners like you and your friend — the one who was just laid off and is trying to figure out how to pay her mortgage on unemployment insurance because minimum wage workers can’t keep a decent savings account even if they try. You think the biggest beneficiaries will be the financial markets and investors. There is this aching feeling that you and ordinary citizens are going to land on the wrong side of the government’s rescue mission.
Alice Rivlin, a senior fellow at the Brookings Institution, wrote in July, when it was clear where the government was headed that if “housing prices continue to fall and investor confidence weakens further, taxpayers could take a hit — maybe a big one.”
Is anyone listening? You scream louder like that parrot in the television commercial: “Can’t take this; not another day.” A federal stimulus check can only go so far.
You keep thinking about those executives at Fannie Mae like Franklin Raines; he was leading the company when it had to restate its earnings for 2001 through 2004. Raines and others had misrepresented the corporation’s income, resulting in bigger bonuses and more money for retirement accounts. Freddie Mac wasn’t much better. Officials at the Federal Housing Enterprise Oversight said the problems also included “excessive risk taking and poor risk management.”
Raines resigned but not before he scored a lucrative “get-out-of-Dodge” package for himself — and his wife. Now, the government, which is really you and other taxpayers, has to step in to fix the mess that greed created.
Fortunately, the Office of the Chief Financial Officer reports that the District government won’t be hurt — although it’s “monitoring” the effect on banks where the city keeps its money.
Ed Lazere, head of the nonprofit Fiscal Policy Institute, is concerned. Grants from Freddie Mac are lifelines for many area groups.
“It’s an odd duck to have a federally controlled entity that has a charitable arm,” says Lazere, adding that it’s “conceivable” the government might continue to provide grants.
Dream on.
Years ago, Fannie Mae rolled its charitable foundation into overall corporate operations. But even before then, when it was swimming in cash, it was a freeloader. It expertly worked its congressional tax shield. It didn’t pay property or sales taxes to D.C. When challenged, its leaders cited the corporation’s philanthropic endeavors.
Please. The combined salaries, stock options and retirement benefits of those executives were far greater than the crumbs thrown the District’s way.
Jonetta Rose Barras, an author and political analyst, can be reached at [email protected].
