Senate Democrats continued their dog and pony show disguised as a finance reform bill today, a bill ignoring the main culprits of the housing meltdown: Fannie Mae and Freddie Mac.
After losing nearly $72 billion over the last two years, taxpayer-owned Freddie Mac today reported another net loss of $6.7 billion in the first quarter of 2010.
But how can that be?
Politico reported just today that House Financial Services Committee Chairman Barney Frank (D-Mass.) urged the White House they should fight for the two mortgage giants at the very epicenter of the 2008 financial crisis.
From the report:
Frank sent a two-page memo Tuesday evening to Obama administration officials urging them to return fire to defend the Wall Street reform bill.
In the memo, a copy of which was obtained by POLITICO, Frank said Republicans have decided to fight Wall Street reform by arguing that the bill is not complete because it doesn’t reform Fannie and Freddie, whose failures were at the heart of the financial meltdown.
“They have gained a lot of traction with that argument,” Frank wrote of his Republican critics, “in part because we did not fight back against the misrepresentations early enough. I want to be sure that we do not repeat this pattern.”
According to the report, Frank assured the White House in the memo that Freddie and Fannie are not losing money as they are currently operated — which means they aren’t making the deficit any worse.
And they wouldn’t be making the deficit worse if what Frank said were only true.
Republican Study Committee Chairman Tom Price (R-Ga.) questioned Democrats’ refusal to reform Fannie and Freddie.
“While Democrats falsely claim their financial reform plan will end the bailouts, they do absolutely nothing about Fannie Mae and Freddie Mac, who are still hemorrhaging money left and more left,” Price said. “Financial reform absolutely must address the reckless mortgage lending made possible by Fannie and Freddie, which was at the root of the financial crisis. Fannie and Freddie’s business model of privatizing profits while socializing losses must not be allowed to continue.”
“To date, the Treasury and the Federal Reserve have provided Fannie and Freddie a $2 trillion bailout,” Price continued. "That they continue to suffer financial losses shows the fundamental weakness of a political economy in which Washington picks winners and losers. House Republicans have a plan to eliminate Fannie and Freddie’s enormous taxpayer subsidies and force them to compete on a level playing field like every other company. It should not be the responsibility of hardworking American taxpayers to continue to foot the bill for the Democrats’ culture of permanent bailouts.”
Ouch. That one left a mark.