Socialism Disguised as Capitalism

People smarter than me are saying it so it must be true: Fannie Mae and Freddie Mac are socialist institutions nursing at the teat of government. They are privately owned companies backed by our tax dollars, which encourages the "capitalists" running them to take imprudent risks.

Here's an excerpt by Terence Corcoran's article in Canada's National Post.

...turns out not to be rampant capitalism but out of control back-door socialism.

There is nothing free market about the two American mortgage backers, hybrid institutions created by the U.S. government to support mortgages and make home buying easier and more affordable for Americans. Fannie Mae and Freddie Mac, prodded by Congress and regulators, socialized trillions of dollars of mortgage risk on the backs of U. S. taxpayers. Along with dozens of other U. S. government programs that lured American's into a home-buying frenzy, the two institutions -- now getting even more socialist backing from Washington -- stand among the leading creators of the U. S. mortgage and credit crisis.

So what do we do about them now? Kill them! (Freddie and Fannie, that is.) That's what Holman Jenkins suggest in his WSJ article.

The obvious solution is to nationalize Fannie and Freddie and break them up. Sell off their regional underwriting offices to private investors. Don't heed any guff about how Fannie and Freddie are "vital to the functioning of the U.S. housing market." Houses would still need to be financed, and the private sector would jump at a chance to get the solid, triple-A business that Fannie and Freddie now monopolize. Indeed, there's evidence that their implicit subsidy never flowed through to homebuyers anyway, but was captured by their shareholders and managers.

So how did these crony capitalists, these socialist welfare queen moochers disguised as free marketeers get by with it? They were in bed with federal government officials who love taking your money and giving it away to others, or in this case, using it to back shaky home loans to people who were not financially ready for home ownership. Politico breaks it down for us here.

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Repubican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House. (Silverfiddle note: McCain's man lobbied for the institutions, but Obama's man was a little higher up the food chain: He was the CEO of Fannie Mae, leaving in 1998 with a golden parachute.)

Fannie and Freddie’s aggressive political maneuvering has helped stave off increased regulation and preserve special benefits such as exemption from state and local income taxes and the ability to borrow at low rates.

There you have it: State sponsored socialism, all in the name of doing good and helping people...

The crony capitalists and Wall Street banksters seem to be well served by our government. How about you?