Most of the politicians Americans trust to protect their interests seem intent on enriching themselves and their buddies at the public’s expense. Yes, I know, that’s not news. We the people keep electing foxes to guard the hen house. That’s how it has been (and probably will be) forever. But I don’t think the looting has ever been as blatant as it is today.
To illustrate my point, here’s an excerpt from an article by David Dayen in Salon.com:
Members of both parties, and the entire White House economic team, have wanted for years to deliver a startling wealth transfer from the public to Wall Street, one that will almost certainly trigger homeowner abuse while making the largest financial institutions wildly rich.
According to the article, the plan “would eliminate Fannie Mae and Freddie Mac, companies currently under a government conservatorship, which package and sell securities backed by residential mortgages. Instead, … private financial institutions (would) issue their own mortgage-backed securities, and give them government insurance against losses.”
I know, you probably don’t see the harm in the proposal. Like me, you’re probably not that well schooled in high finance. And you probably have lingering doubts about Fannie and Freddie. After all, weren’t they mixed up in that awful housing market crash?
But Dayen assures us that:
Fannie and Freddie didn’t cause the crisis. They were late to the party, in fact, only dipping into subprime mortgages once they lost market share. Private banks fueled the housing bubble by demanding more and more subprime loans to purchase and package. This degraded lending standards, as anyone with a pulse could get a mortgage. Banks knew the loans were garbage, but built the securities anyway, and sold them all over the world to investors who were lied to about their quality. When the music stopped, losses on the private securities triggered the meltdown.
According to Dayen, “Washington lawmakers believe the antidote to this is to let the same private banks that caused the crisis dominate mortgage securitization all over again, by eliminating their biggest competition. Not only that, it would give Wall Street a government guarantee for this privilege.”
Dayen says the plan would let the private sector “take 10 percent of the risk and collect all the profits, while the government would take 90 percent of the risk and collect none of the profits.”
He calls this “insanity.” I call it skullduggery.
Fortunately, the bill to implement this scheme got stuck in the Senate Banking Committee. Apparently, there are still a few decent folks in Congress. And I believe Ohio Senator Sherrod Brown (photo above) is one of them. He introduced a series of amendments that helped stall the legislation. Also contributing to blocking the bill were Republicans who balked at the idea of any government involvement in the housing market.
But the bill is only stalled, not dead. If the looters can work out their differences, they will probably have enough clout to override Senator Brown and the other “liberal” dissenters.
Perhaps if Dayen’s article gets the hens squawking loudly enough, the foxes might back off. This time.