Morning Bell: When Will Our Progressive Corporatism Nightmare End?

Conn Carroll / October 22, 2010

$154 billion. That is the amount of taxpayer money that will be needed to bail out Fannie Mae and Freddie Mac according to a new “stress test” performed by the Federal Housing Finance Agency. And that is the good news. If the economy dips into a second recession and foreclosures rise, the Fannie and Freddie bailout could nearly double in size. The agency, which oversees Fannie and Freddie, released the numbers “to inform public debate about the future of the two companies” ahead of expected Obama administration proposals slated for early next year. But if you are hoping for major policy changes from this administration, don’t hold your breath.

In August, Treasury Secretary Timothy Geithner hosted a meeting in the Treasury’s Cash Room with select bankers and administration cheerleaders like Keynesian economist Mark Zandi. This is how Daily Report for Executives summarized the meeting:

The government must continue to play a fundamental role in the future of housing finance, a panel of experts agreed at a conference convened by the Obama administration to begin to frame a comprehensive housing finance reform proposal for delivery to Congress by January 2011.

Just what is the record of government “experts” in preventing financial catastrophe? Well, the 3,814 employees of the Securities Exchange Commission, the 7,241 employees of the FDIC, the 3,216 employees of the Comptroller of the Currency, and the 3,204 employees of the Federal Housing Administration all failed to see, yet alone prevent, the recent financial collapse. (more…)