Today, Members of Congress have an opportunity to set out on the road to recovery by agreeing to co-sponsor the Accurate Accounting of Fannie Mae and Freddie Mac Act. Authored by Representative Scott Garrett (R., N.J.), the bill would require that taxpayers receive an honest accounting of their exposure to the failed housing behemoths.
The Obama Administration has refused to provide such an accounting in its official budget, which is indefensible under traditional rules for government-sponsored entities. As the Congressional Budget Office (CBO) pointed out last month, since the government placed Fan and Fred in conservatorship and Treasury took controlling ownership stakes in 2008, "those actions make Fannie Mae and Freddie Mac part of the government and imply that their operations should be reflected in the federal budget."
Of course it's indefensible.
But heh, this is nothing new. The biggest problem with these "factories" of housing BS games is that their balance sheets are about as transparent as a piece of plywood, they have a documented history of cooking their financial reports and they're raw political tools of people like Bwarney Frank.
I called for this when the government first provided "support" to these "institutions." Frankly, they need to be shut down and put into run-off - it's the only thing that makes sense. Those who argue that we "won't have a housing industry without them" are simply wrong - we will have a housing industry - a sound one, based on sound credit fundamentals, instead of a serial bubble machine that our government attempts to keep inflated even though it has already popped!
But short of that we must have transparency and accountability, and the only way to accomplish that is for the GSEs to be formally placed "on sheet" where we can all see exactly how ugly things really are.
Whether this provokes Bondzilla into waking up is an option question - frankly, I'm stunned that he hasn't already stepped on a few buildings. Nevertheless no institution, including our government, deserves to get away with raw misdirection and outright accounting fraud.
