On Christmas Eve: Massive bailouts to Big Ins/Big Pharma by Senate AND to Freddie/Fannie by WH

seafan

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Sat Dec-26-09 10:40 PM
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On Christmas Eve: Massive bailouts to Big Ins/Big Pharma by Senate AND to Freddie/Fannie by WH

Many of us were unwilling witnesses to the giveaway to Big Health Insurance/Big Pharma, courtesy of the US Senate on Christmas Eve.

But on the same day, the White House announced an unlimited credit line at the disposal of troubled Freddie Mac and Fannie Mae.

Some days are just spectacular for the chosen few, aren't they?

Jane Hamsher writes:

December 26, 2009 11:00 am

The classy move on the part of the White House to give Fannie and Freddie an unlimited slush fund and dump the news on Christmas Eve is drawing rave reviews as finance bloggers get back to work.

Zero Hedge:

So. Let us summarize:

We do not expect the GSE�s to grow their portfolios at all, so we are fixing the bloated portfolio problem by easing the portfolio caps to permit a quarter trillion dollar expansion thereof.

We do not expect either of the GSEs to need more help from the Treasury, so we are responding to the underutilized $400 billion �lifeline� the GSE�s have with the Treasury ($111 of which is currently used) by expanding it to� infinity.

Oh, and though they have collectively lost nearly $200 billion, we are paying the CEOs around $6 million each.

Great work team! It�s already almost 11:00. Let�s go to lunch.

Chris Whalen: (from cached link)

The issue for Democrats and members of the American Left raised by this article in The Nation is why does Barack Obama allow this situation to continue one day longer? The continuance of Dugan at OCC and Treasury Secretary Tim Geithner at Treasury illustrates how feeble the White House remains when it comes to financial services policy.

Or maybe the problem is one of conflict. Like Larry Summer�s derivatives toxic waste dump inside Harvard�s endowment fund?

And let�s not forget Rahm Emmanuel�s proud legacy as a director of Freddie Mac.

Maybe the Obama White House just can�t go there when it comes to financial anything.

Dave Kotek:

When will Mr Geithner and his colleagues learn that there are no secrets and that transparency and explanation is much better than release of details in the middle of the night. Probably never but there are some of us who will leave our holiday time for a few minutes and keep reminding them. We are scheduled to remind them again on CNBC Closing Bell at 4:30 PM on Monday. CNBC Squawk Box Asia and on CNBC Power Lunch on December 30.

Numerian:

We are getting very used to watching the federal government operate with only the sketchiest information on what it is doing. Most everything seems to be done behind doors and in secrecy. That�s what makes this brief announcement about Fannie Mae and Freddie Mac so troublesome. When the federal government starts talking about unlimited guaranties to cover future losses, our biggest worry ought to be that whatever large number we can contemplate is included under the word �unlimited�, the government has an even larger number in mind.

Ian Welsh:

Notice also how they�ve made an unlimited commitment without consulting Congress. You only need Congressional approval to spend money on wars and healthcare, when it comes to bailing out banks, apparently the Presidency controls the power of the purse all by itself.

And still no independent auditor for Fannie/Freddie in sight.

But you want health care reform?

Ha! 60 votes.

As Jon Walker sums it up:

December 26, 2009 7:03 am

The Treasury had originally given both Fannie Mae and Freddie Mac a $200 billion line of credit. Even though neither company had come close reaching their current credit limit, the Obama administration had been thinking of doubling that line of credit to $800 billion total ($400 billion each). Instead of doubling the limit, the Obama administration announced late Christmas Eve that the Treasury department would give both companies an unlimited line of credit. By removing any cap on the potential loan before the end of the year, Obama was able to avoid getting Congressional approval for the decision.

We have been hearing a lot of big numbers lately due to the bailouts. It is important to put into context just how massive this loan to Fannie Mae and Freddie Mac really is (and without Congressional approval!). So consider this, the GDP of the following countries are:

South Korea � $929 billion
Netherlands � $860 billion
Turkey � $794 billion
Poland � $526 billion
Indonesia � $514 billion
Saudi Arabia � $468 billion
Norway � $450 billion
Greece � $357 billion
Argentina � $328 billion

(source World Bank 2008)

President Obama, without congressional oversight or approval, decided to give these two companies a loan equal to the entire economic output of most mid-size countries. You may agree or disagree with this move. You may think it is �necessary� because of how completely broken our Congress is. Regardless, it is important to realize the sheer size of the numbers being (discussed).

How long did they think this would go unnoticed?

The caliber of this corporate robbery of the public purse is astronomical, unprecedented and facilitated by this administration.

There is no looking away from this.