Now I'm getting impressed.
The FINREG folks are screaming about the possibility that Fannie and Freddie are being included in "resolution authority."
This would effectively tax the entire financial system to cover the Fannie and Freddie mess.
In my opinion, this is a GREAT thing, and the lobbyists who are screaming this morning can go do this:
Because the banks are the ones who wrote this paper and then sold it off to Fannie and Freddie at a profit to be securitized!
For them to argue that "they bear no responsibility for the costs" that this imposed on the taxpayer (well over $100 billion realized thus far, and likely as high as $1 trillion before all is said and done) is ridiculous - and an outrage.
On the contrary: Just as we both lock up drug dealers and drug users, we should assess those institutions that exploited the Fannie and Freddie leverage game to turn a "profit" on the back of the American Taxpayer and homeowner.
Market discipline only works when everyone who "makes money" by exploiting loopholes and excessive leverage gets tagged for the costs when the music stops. If anyone can avoid that responsibility then someone will find a means of exploiting someone else's ability to take excessive leverage yet shield themselves from the consequence when it all blows up.
While I'm sure there will be a furious fusillade of lobbying to try to get this clause excised from the FINREG bill, it must stand - that is, Fannie and Freddie's idiocy must be assessed back on the financial institutions that profited from their profligacy for more than a decade.
Doing so will provide an extraordinarily strong protection against these clownfaces in the banking system from doing it again.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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