Or so it would seem. From the Wall Street Journal:
The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.
“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.”
Is no one paying attention to the government’s spending our money? Is it really “our” government, or is it now fully “theirs”?
The timing of the announcement (Christmas Eve) was designed for it to receive as little notice as possible, already a bad sign. Skeptical observers focused on two possible explanations: first, that losses at the GSEs will be high, troubling investors, and the offer of unlimited support will calm them. Freddie and Fannie debt is now de facto a full faith and credit obligation of Uncle Sam, as if there was any doubt of that once the conservatorship was announced. But the idea that nearly $300 billion of firepower (the agencies had used roughly $110 billion of an authorization of $400 billion) is troubling.
By the way, did you notice the quiet move the US Treasury made to prop up the GSEs a few days ago – in essence, “removing the caps that limited the amount of available capital to the companies to $200 billion each“. Holy moly folks! When will it end? Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. While people spent their holidays with their family, this headline likely will go mostly unnoticed – strategic timing or something else?
For those caught in the Home Affordable Modification Program, you have my prayers. For the most part the government has let you down. But that same government sure moves quickly to cover their own behinds.