From the Wall Street Journal:
The Treasury Department's surprise Christmas Eve move to uncap the potential aid to Fannie Mae and Freddie Mac should be investigated, lawmakers from both political parties said Wednesday.Rep. Dennis Kucinich (D., Ohio) said his congressional subcommittee plans to investigate Treasury's decision to lift the existing $400 billion cap on government cash available to the two firms. Separately, Reps. Scott Garrett (R., N.J.) and Spencer Bachus (R., Ala.) called for the House Financial Services Committee to hold a hearing on the matter.
Mr. Kucinich, who chairs the domestic policy subcommittee on the House Oversight and Government Reform panel, said he is concerned about how the two government-controlled firms will use their new flexibility.
"This cannot be used simply to purchase toxic assets at inflated prices, thus transferring the losses to the U.S. taxpayers and acting as a back door [Troubled Asset Relief Program]," Mr. Kucinich said in a statement released by his office.
Messrs. Garrett and Bachus raised similar concerns in a letter to Rep. Barney Frank (D., Mass.), who chairs the Financial Services panel. The two GOP panel members decried what they called a "transparent attempt to hide the news from the American people" by announcing the news the day before a major holiday.
"With hundreds of billions of taxpayer dollars committed to these two organizations and trillions of dollars in total taxpayer exposure, this level of oversight is plainly insufficient," the two wrote, referring to the lack of committee hearings on the two firms this year....MORE
HT: MarketFolly who is pretty steamed himself:
Kucinich et.al.: Prove It (Fannie/Freddie "Outrage")
So now Mr. Kucinich comes out with this regarding the Christmas Eve "announcement" from Treasury:
"This cannot be used simply to purchase toxic assets at inflated prices, thus transferring the losses to the U.S. taxpayers and acting as a back door [Troubled Asset Relief Program]," Mr. Kucinich said in a statement released by his office.
Mr. Garrett and Bachus echoed these sentiments.
So sirs, what do you intend to do about it, given that as things stand right now this certain CAN be and WILL BE used to purchase toxic assets at inflated prices and WILL result in the transfer of the losses to the US Taxpayer, acting as, indeed, a back-door "TARP"!
As I said when the "deal" was announced (in the dark of the trading night):
Cost the taxpayer an unlimited amount due to shoddy underwriting and lax (or absent) risk controls and not only do you get bailed out, you also get paid $6 million a year.
Kucinich went on to say:
"I want to determine whether Fannie and Freddie have a cohesive plan to buy up underperforming mortgages that remain on the books of the big banks, at appropriate prices, and undertake a massive reworking of the terms of the mortgages," he said in the statement.
The banks will not sell at an "appropriate price", just as The Fed did not buy at an "appropriate price" with its "support."
The reason is clear: If one actually goes through those MBS and adjusts their value for the so-called "prime" loans that really were not, yet were stuffed into those securitizations, one would be forced to price them at their actual intrinsic value....MORE
