Just when you thought the government couldn’t put it’s hands enough in the marketplace, they have now set up a plan to buy stocks from both Fannie Mae and Freddie Mac. They claim that this will help stabilize these companies. Here:
“Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity “if needed” in the firms, and to increase their lines of credit with the department from $2.25 billion each. The temporary authority may be for 18 months, a Treasury official told reporters on a conference call on condition of anonymity.”
This is what Paulson had to say about whether the taxpayers would have to foot the bill:
“Paulson sought to ease concerns that taxpayers would foot the bill for a bailout. “Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer,” he said.”
I do not understand how anyone in the federal government can “buy equity” without spending taxpayer money or inflation. I mean sure if they borrow money from the federal government and pay it back with enough interest to keep up with inflation it could be said they are not spending taxpayer money, but I doubt we will ever see the money back in our hands.
And what are the Republicans doing? Rolling over:
“House GOP leader John Boehner, R-Ohio, and Republican Whip Roy Blunt, R-Mo., said they “stand ready to work with Secretary Paulson and congressional Democrats to take appropriate steps to ensure the soundness of our mortgage markets.”
Sure, Republicans just let the Democrats regulated everything. Pretty soon every loan in this country will be insured by the federal government and everyone will take too much risk. We will then see many people defaulting on the government and taxpayers will have to bail those people out too. Expect to see another major bust in the future. Not to mention Freddie and Fannie will be ready to take more risk with their newly insured debt.
And I couldn’t even imagine the corruption and public choice aspects of the government buying stocks. Who’s stocks? When? Is the SEC going to investigate the Treasury Department for insider trading?
Congratulations America, the government is now in the business of making money off of your tax money, while assuring that the banks will take too much risk and this will happen all over again.