Palin On Freddie and Fannie

Sarah Palin said:

[T]he Republican vice presidential nominee claimed that lending giants Fannie Mae and Freddie Mac had "gotten too big and too expensive to the taxpayers." The companies, as McClatchy reported, "aren't taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization."

(Emphasis supplied.) Palin issued standard issue Republican nonsensical cant (See Curve, Laffer) on matters economic - which, as usual, is utter nonsense. Fannie Mae and Freddie Mac will NOW become "too expensive for taxpayers" because the government is going to bail them out. That said, the bailout plan is probably a good idea, as Krugman explains.

Is this the great gaffe of the century? Not really. To me it is standard issue GOP BS. Which seems the stronger political point to me. McCain-Palin = Bush's Third Term.

By Big Tent Democrat, speaking for me only

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    Getting excited over verbal gaffes (5.00 / 3) (#8)
    by myiq2xu on Mon Sep 08, 2008 at 02:36:19 PM EST
    Isn't a smart strategy for someone who has made quite a few of his own.

    It's not the gaffes, it's the carefully-worded stupidity that matters.

    Not Just (5.00 / 1) (#10)
    by WS on Mon Sep 08, 2008 at 02:39:57 PM EST
    a verbal gaffe but also a lack of understanding over how the economy works.  What else doesn't she know and will the policies of McCain/Palin do anything to help average working people?  

    Seems to me this is an issue-based discussion (5.00 / 5) (#12)
    by andgarden on Mon Sep 08, 2008 at 02:42:32 PM EST
    It is a problem that she couldn't express her position on an important issue in a way that made sense.

    Yes and it fits into (5.00 / 4) (#13)
    by IndiDemGirl on Mon Sep 08, 2008 at 02:46:02 PM EST
    the theme -- Bush didn't get it. McCain/Palin don't get it. We can't afford 4 more years of the last 8.

    Well she said this (none / 0) (#31)
    by fercryinoutloud on Mon Sep 08, 2008 at 03:18:02 PM EST
    on Saturday after it was all but officially announced that there would be a take over. So if you take her words as having that knowledge, as others including the press did, then it would make sense that she said it in the sense that Fannie Mae had "NOW" been taken over by the taxpayers.

    Seems that people are getting desperate to fling anything at Palin.

    Of course if this would have been Obama he could have (just learned this acronym here the other day) WORM(ed) his way out of it by restating 2 or 3 times what he really meant.

    WORM: What Obama Really Meant.

    Off-topic but noteworthy -

    In today's Gallup tracking poll McCain leads by 5.

    "John McCain's support among registered voters increased six percentage points from immediately before the GOP convention to immediately after."


    Uh? McCain endorsed the Paulson plan. (5.00 / 1) (#45)
    by Ramo on Mon Sep 08, 2008 at 03:45:55 PM EST
    Are you saying that she was trying to argue with her running mate here?

    I think the comment was (none / 0) (#49)
    by IndiDemGirl on Mon Sep 08, 2008 at 03:55:21 PM EST
    inserted to defend Palin, slam Obama and again trumpet the poll.  It is the 2nd comment today regarding that same poll.  

    I notice that this person's first post at this site was to praise Palin.


    Praised McCain's (none / 0) (#65)
    by MKS on Mon Sep 08, 2008 at 05:47:00 PM EST
    acceptance speech at the convention too here in real time....

    Republican polemicist....


    No I am not saying that (none / 0) (#52)
    by fercryinoutloud on Mon Sep 08, 2008 at 03:58:09 PM EST
    My main point was to take BTD's "Now" argument and show that it in fact applied to what she said given the available knowledge on Saturday that a takeover was going to happen and really had because the decision had already been made which everyone knew.

    As for McCain/Paulson vs what Palin said, they are two different 'time frame' issues. Paulson's plan is now. Palin's statement suggests what may be looked at in the future to help avoid this type of thing again.

    Perhaps not having one giant entity that buys up all 'conforming' type of loans is a smart idea. It may be better to have several entities to spread risk. And several entities could lead to competition which could lead to lower interest rates.


    An awful lot of (4.00 / 3) (#53)
    by IndiDemGirl on Mon Sep 08, 2008 at 04:02:22 PM EST
    words to "explain" her statement/mistake.  Do you get McCain points per word?

    I See It As A Message To The Base (none / 0) (#58)
    by flashman on Mon Sep 08, 2008 at 04:56:15 PM EST
    Republicans hate bailouts.  Even those that are necessary are a bitter pill.

    BTW, it's considered bad taste to downrate someone you're having a disagreement with, even though the FP'ers do it all the time.


    Palin said Fannie and Freddie (none / 0) (#64)
    by MKS on Mon Sep 08, 2008 at 05:41:27 PM EST
    were government programs that "had gotten too big and too expensive to the taxpayers"....Did that happen in two days?

    She had no clue what she was talking about, so she defaulted to the GOP talking point that (all) government is bad and too big and too expensive.

    You need to go back to shill school.


    I'll shill. (none / 0) (#73)
    by andrys on Tue Sep 09, 2008 at 04:19:52 AM EST
    They are big of course and were virtually unsupervised (really sort of shocking that Treasury did not realize until very recently) that they got into MASSIVE trouble and eventually, at the least, caused billions of taxpayer money in making up the debt that it grew.  We are the ones who had to step in (that's our money keeping it together because they couldn't save themselves) or see a virtual collapse if Treasury hadn't stepped in last week.

      The NY Times article yesterday described the drama happening at the white house in an area below, while we were snoozing through Thursday's RNC doings.  On Friday Treasury met with Bush and on Saturday told the heads of Fannie Mae and Freddie Mac, in separate meetings, that they no longer had jobs.  It's sad, since Fannie Mae's head had heeded some warnings and did bring in capital as requested but Freddie Mac hadn't.  But they're seen of course as a duo and they couldn't do a conservatorship of just one because of a lack of confidence as a result in the two.  At least that's how I understand it.  
      That's a simplified take.  I don't usually read about such things but I now have a Kindle and love my daily NY Times Latest News so I am just doing a rudimentary report on what I'd read.  It's an earthquake but it's also not good to say so, and this fast action has steadied markets.


    Minor correction (none / 0) (#74)
    by andrys on Tue Sep 09, 2008 at 04:23:10 AM EST
    Thursday they met with Bush and Friday the two heads were "let go."  That's tremendous drama.  

    WORM (none / 0) (#38)
    by flashman on Mon Sep 08, 2008 at 03:27:12 PM EST
    I've seen that many times, but never knew what it meant.  Thanks!

    Even I will admit (5.00 / 3) (#9)
    by AF on Mon Sep 08, 2008 at 02:36:35 PM EST
    That this is not much of a gaffe.

    First, 90% of Americans don't understand what she said wrong.  Second, the Republicans will come up with some bogus excuse about how she meant Fannie and Freddie were putting too much taxpayer money at risk.

    It's true (5.00 / 1) (#14)
    by eric on Mon Sep 08, 2008 at 02:46:39 PM EST
    90% of Americans probably don't understand.  That is what makes politics so damn frustrating - one can't simply appeal to reason and depend on an informed electorate that can actually grasp these concepts.

    The only thing that one can hope for is someone on the TV to distill it down and say that this was a "dumb thing to say".


    90% of americans (5.00 / 2) (#47)
    by Jlvngstn on Mon Sep 08, 2008 at 03:50:19 PM EST
    are not second in command.  I would hope that number 2 would at least have basic understanding of the situation.  

    It Does Seem Likely (none / 0) (#11)
    by flashman on Mon Sep 08, 2008 at 02:41:27 PM EST
    That her statement was just awkardly worded, especially since it was very apparent that the govenment would be stepping in.

    I think you give her too much credit. (none / 0) (#16)
    by Lil on Mon Sep 08, 2008 at 02:46:53 PM EST
    It is not just awkward wording, IMO. As Obama said a few weeks ago, it is like the Republicans take pride in being ignorant.

    I'm willing to give her the benifit of doubt (5.00 / 2) (#19)
    by flashman on Mon Sep 08, 2008 at 02:52:27 PM EST
    since these programs were created by the government, and would clearly be rescued.  I've heard clumsy statements from both sides in this election cycle.  Either way, it doen't stand to have much effect as gaffes go.

    the worst Obama gaffe recently (3.00 / 1) (#22)
    by Lil on Mon Sep 08, 2008 at 03:02:40 PM EST
    is the wild success of the surge. I thought I'd throw up. But I still don't give Palin a pass on this, pure ignorance if you ask me, not just an awkward comment.

    He's Made Wrose (5.00 / 1) (#36)
    by flashman on Mon Sep 08, 2008 at 03:19:56 PM EST
    And I remember  Bill Clinton making some pretty awkardly worded statements, but we knew what he meant, even as the MSM tried to convince us otherwise.  It would be foolish to try to make hay from this straw, since the bailout could indeed be very expensive to tax payers.

    But when McCain makes them (none / 0) (#62)
    by BernieO on Mon Sep 08, 2008 at 05:06:26 PM EST
    everyone focuses on his age, which I think is unfair. I remember Reagan very well and it was clear that he was getting foggy pretty early on.  I don't see that with McCain. He mixes words like Iraq and Iran up but look how many have made the Obama/Osama gaffe. Matt Lauer did, and he is not that old. It is true that the chance of his dying in office are much higher than Obama, which is a legitimate concern, but portray his gaffes as evidence that he is slipping mentally is just ageism.(And if people keep it up his mom might just start slapping people around. I wouldn't want to get her mad at me.)

    I hate this kind of nit picky stuff. There is plenty to criticize which is much more substantive - like McCain's tax cutting policies. This is where Dems can help the public understand the real issues, especially now that so many people are paying attention. For example it is time we put to rest the Republican scam that tax cuts pay for themselves. Also the one that tax increases always hurt the economy. Bill Clinton proved beyond a doubt that this is not true.  


    I don't know (none / 0) (#75)
    by andrys on Tue Sep 09, 2008 at 04:36:21 AM EST
    All four of these candidates will be weak in more than a few areas upon entering the WH. Only one of them (Biden) would probably be remotely considered for a CEO job and none of them would qualify.

      What we need are people with the smarts to shore up the weak spots where they must be stronger once in the White House and not ridiculously dependent on advisers, but certainly with some pretty good help there.

      Obama has gotten passes for getting all kinds of numbers wrong (that were meaningful) and excused a loss to Clinton by saying that her state, Arkansas, was closer to that state.  But it wasn't and the state bordered his own.  That's basic high school geography or earlier, but we don't really expect everyone to remember these things.  Not even the number of states in our union, which is even more basic.
    Or whether or not the Senate Bank Committee was "my  committee," even if you said it was to people in Berlin in front of mics, but you were not even a member of it.

     And there've been explanations for why she said that at a time when newspapers were filled with stories (before it happened) that they might have to be taken over and $$$$$ (ours) spent to save the situation.  

     The Gotcha madness will probably hurt all 4 of them before this election is over.


    Not much of a gaffe (5.00 / 4) (#15)
    by ruffian on Mon Sep 08, 2008 at 02:46:46 PM EST
    A sloppy statement of standard GOP BS at worst, if you listen to the clip on HuffPo. Fact is, Fannie and Freddie ARE going to be expensive to taxpayers. Does anyone want to argue with her that they are not?

    Problem is, what's her proposal? (none / 0) (#17)
    by andgarden on Mon Sep 08, 2008 at 02:49:07 PM EST
    I think Obama has an opening here to steal/modify one of Hillary's themes: "Solutions, not sarcasm."

    "Smaller, more efficient" means (5.00 / 0) (#56)
    by litigatormom on Mon Sep 08, 2008 at 04:34:46 PM EST
    "guarantees fewer loans."

    At least, that's my guess about what she meant.


    She had some vague words (4.00 / 1) (#18)
    by ruffian on Mon Sep 08, 2008 at 02:52:10 PM EST
    about she and McCain making them smaller and more efficient.  Again, the standard GOP stuff. Should be easy to counter with a specific Dem proposal.

    I'd rather see it countered that way then with a 'she made a gaffe' approach.


    Maybe Charlie Gibson can ask her about (5.00 / 2) (#20)
    by steviez314 on Mon Sep 08, 2008 at 02:54:19 PM EST
    the Housing crisis.

    Yeah, right.

    The correct (none / 0) (#32)
    by Wile ECoyote on Mon Sep 08, 2008 at 03:18:21 PM EST
    answer is more gov't

    The correct answer is that deregulation of Wall St (5.00 / 2) (#44)
    by steviez314 on Mon Sep 08, 2008 at 03:45:48 PM EST
    and banking has been an absolute disaster, letting the masters of the universe make stupid loans, packaging them into products no one understood, selling them to greedy gullible investors, and then using taxpayer funds to bail themselves out when they screwed up.

    When the crap hits the fan, all the capitalists become socialists.


    No gaffe (5.00 / 3) (#24)
    by Prabhata on Mon Sep 08, 2008 at 03:04:59 PM EST
    It's the only thing the government can do at this point, but Palin's statement is also correct.

    Except, it's not correct (5.00 / 3) (#27)
    by eric on Mon Sep 08, 2008 at 03:08:44 PM EST
    Fannie and Freddie cost us only now that they are bailed-out, seized, nationalized, or whatever you want to call it.

    The bail-out is what costs the money.


    The bail-out illustrates how (none / 0) (#76)
    by andrys on Tue Sep 09, 2008 at 04:40:05 AM EST
    our taxpayer money is at risk and we pay ultimately for business foolishness of this unbelievable kind.

    taxpayer funds have been used for Fannie Freddie.. (5.00 / 2) (#26)
    by jedimom on Mon Sep 08, 2008 at 03:06:43 PM EST
    I would not go after her on this b/c we DO send taxpayer money into these GSEs before this move we have done so

    we had already agreed to this in theory adn as PIMCO announced last Thursday via Bill Gross that they would buy ZERO in any bank offerings until Paulson stepped up and put the Federal balance sheet on the line, we knew this was coming and the Congress and markets have been debating the moral hazard here for over a year now, so that may be what she was referring to IMO, we also stepped in in July..

    from July 14th:


    ....The Bush administration and the Federal Reserve announced an emergency rescue plan Sunday to bolster Fannie Mae and Freddie Mac, which hold or guarantee more than $5 trillion in mortgages -- almost half of the nation's total.

    The plan would temporarily increase a long-standing Treasury line of credit that could be provided to either company. Treasury also said it would, if necessary, buy stock in the companies to make sure they have enough money to operate.

    The Fed also announced it would allow Fannie and Freddie to get loans directly from the Fed -- a privilege previously granted only to commercial banks until this March, when the Fed extended the borrowing to investment banks to deal with the collapse of Bear Stearns........

    again (5.00 / 1) (#30)
    by eric on Mon Sep 08, 2008 at 03:13:15 PM EST
    there is no question that the bailout costs the money.  The events you list are all part of the bailout.  They were attempts to avoid a total takeover.  As Freddie and Fannie normally operate, they are private.  So no matter how "big" they got, which seems to be her complaint, they didn't cost us tax dollars.

    Well, they got big (5.00 / 1) (#40)
    by ruffian on Mon Sep 08, 2008 at 03:31:24 PM EST
    in part because of the implied federal guarantee. So it was the assumed promise of taxpayer money that allowed the situation to happen.

    Again, she is being too vague to tell what she is talking about specifically.  I'm not judging until I see McCain and Obama's specific plans.


    I thought i heard last night (none / 0) (#42)
    by nycstray on Mon Sep 08, 2008 at 03:35:01 PM EST
    that the McCain/Obama statements were similar?

    Big enough that the overseeing entities (none / 0) (#77)
    by andrys on Tue Sep 09, 2008 at 04:42:09 AM EST
    did not see the problems.  As a result, they were really in panic mode.  It's fascinating to read the timeline and the reactions.  They, too, were disbelieving (the decision makers).

    The Biggest Gaffe (5.00 / 1) (#28)
    by BDB on Mon Sep 08, 2008 at 03:09:29 PM EST
    seems to be the GOP decision to go along with changing the topic to the economy.  That should be good news for Democrats.

    Of course, these are Democrats we're talking about so we'll see if they can take advantage.  They just decided not to put their GOP colleagues through an uncomfortable SCHIP vote because apparently it would be so divisive and partisan to make the GOP vote against giving poor kids health insurance two months before an election.  Here's an idea, if they really want to be post-partisan, why not schedule a flag burning vote where that SCHIP vote used to be.

    The Democrats may yet win big in November, but you can't say they aren't doing everything they can to help the GOP out.  

    Unbelievable (5.00 / 1) (#35)
    by andgarden on Mon Sep 08, 2008 at 03:19:56 PM EST
    Their justification is supposedly that they couldn't get enough votes to override. Well, heck, I could have told you that. The first veto override vote was as much of show as this would be.

    There's some other reason they're not doing it. My guess: they made a deal with the President and/or Senate Republicans to take care of some other business that they deemed more important. That, or they got pressure from the few Democrats who didn't want to vote for SCHIP funded by tobacco taxes again, and they bowed to it.


    Cost to the taxpayers, in the future (5.00 / 1) (#29)
    by lizpolaris on Mon Sep 08, 2008 at 03:09:47 PM EST
    As Krugman notes:
    The plan will sustain institutions that play a crucial role in the economy, while holding down taxpayer costs by more or less cleaning out the stockholders.

    My question would be, who are the stockholders?  Aren't they mostly large investors like pension funds - 401Ks, union pensions, state govement employees, teachers?

    So won't a whole bunch of folks be affected twice?  Where's bonddad when you need him...

    China (5.00 / 1) (#34)
    by wasabi on Mon Sep 08, 2008 at 03:19:54 PM EST
    China is a big shareholder.  Note the recent shortage of funds for China's Central Bank.

    The Laffer Curve is perfectly good economics (5.00 / 1) (#55)
    by daryl herbert on Mon Sep 08, 2008 at 04:25:13 PM EST
    The theory behind the Laffer Curve is simple:

    if taxes are 0%, you will raise $0

    if taxes are 100% (total confiscation) you will raise about $0, because no one would do anything taxable, and/or they would hide all of their work to avoid paying taxes

    for all rates in between 0 and 100, you will raise more money.

    In fact, there is some rate at which the government will get maximum revenue.  If you graph it, where the X-axis represents the tax rate, and the Y-axis represents the amount of revenue collected, it will look like a Bell Curve.

    This is all completely obvious and indisputable.  There are situations in which raising the tax rate can result in less revenue.  In fact, Hillary Clinton and Barack Obama debated this several months ago.  Hillary got the better of the exchange, and after the general election, Barack flip-flopped.  Now he says capital gains taxes should be kept low (20%, which is higher than Bush's 15%, which McCain wants to keep, but much lower than before Bush got his tax cuts passed--it used to be 40%).

    Insulting the Laffer Curve in a passing remark is no more thoughtful than insulting Miranda rights as an aside during a speech.

    It's not indisputable or true. (5.00 / 1) (#59)
    by Ramo on Mon Sep 08, 2008 at 04:57:53 PM EST
    That's comic book economics.  There's no fundamental economic law that it looks like "a bell curve."  In fact, there's nothing to say that the curve would have a single local maximum.  Or even a single maximum.  Any reasonable person would know that the curve would be a complicated mess (and this curve would be different for different kinds of taxes, and dependent on all sorts of variables relating to the state of the economy).

    And as an aside, the CGT rate was never 40% during the Bush years.  The rate was 20% before Bush cut it (though the dividend rate was higher).


    Excuse me... (none / 0) (#60)
    by Ramo on Mon Sep 08, 2008 at 04:59:23 PM EST
    that should be "obvious or true"...

    I mean.. (none / 0) (#61)
    by Ramo on Mon Sep 08, 2008 at 05:00:01 PM EST
    "obvious and indisputable"

    "Completely obvious and indisputable" (5.00 / 1) (#66)
    by MKS on Mon Sep 08, 2008 at 05:52:48 PM EST
    that the revenue curve will be a Bell Curve?

    That is ridiculous....On what Martian gass do you base that on?....

    The better point is that Bill raised marginal tax rates in 1993...and the economy boomed....and tax revenues increased....and we had....surpluses....Remember those?  


    Obama would win (none / 0) (#1)
    by rooge04 on Mon Sep 08, 2008 at 02:21:08 PM EST
    in a landslide if we could just keep the focus on the economy and McCain/Palin's HORRID understanding of it.  We'd win easy. Please let them focus on this. Please.

    Understandings (none / 0) (#39)
    by andrys on Mon Sep 08, 2008 at 03:27:24 PM EST
    Stein's article had this last part:
    There are varying explanations that could be offered for Palin's defense. As O'Driscoll noted, both Fannie and Freddie "were hybrid institutions because they had private ownership but... an implicit government guarantee which people thought at the end of the day was explicit."

    Meanwhile, as Baker noted, as of July the two lenders were being offered low market interest rates by the fed again, theoretically, at the taxpayer's expense. But, he added, "I kind of doubt she had any sense of that."

    But that last part was in the normal news.

      I think they might again be underestimating her.

    See today's Washington Post editorial about what they call Palin's "outflanking of the oil comapnies."


    This part caught my eye (none / 0) (#41)
    by ruffian on Mon Sep 08, 2008 at 03:33:19 PM EST
    Meanwhile, as Baker noted, as of July the two lenders were being offered low market interest rates by the fed again, theoretically, at the taxpayer's expense. But, he added, "I kind of doubt she had any sense of that."

    Very demeaning. You don't have to be an expert to have a sense of that. This is exactly the wrong approach to take.


    Yes, that's what I meant (none / 0) (#67)
    by andrys on Mon Sep 08, 2008 at 05:57:24 PM EST
    If I had read about it, not even being that interested in these things but there has been a lot of news on the subject and how they were trying to get them out of trouble with best possible deals, why wouldn't she "have had any sense of it"?

      So, I sure agree with you.

      I was reminded of how ObamaTeam has tried to push the lightweight meme from the beginning.

      Kristol today says:

    To the degree they have to address the Palin question, they'll stick to the argument they made in their first reaction to the Palin announcement: "Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency."

      Just to start things off, they made sure they would Identify her as a Mayor as far as experience and weight were concerned.  They would never mention her being a Governor.

      And then they proceeded to mock the smallness of that job, with Obama saying his campaign staff was larger and his campaign had a much bigger budget -- purposefully comparing the opponent's former job with his current activity.

      He couldn't mention the governorship using this comparison as the Alaska budget runs into several billions.

      That's dishonest.  Do they really need to do that?  Was she that threatening from the start?

    Yesterday, Obama accused her of being For something Before she was Against it.  I seem to remember his making a 'promise' to filibuster a bill which he instead signed meekly.
      And a few weeks of exactly that kind of flip-flopping.  
      Yet today or yesterday, he asked his crowd, do they think that (when they flip-flop) that you/we are that stupid?

      All I could think of was Does he really not remember what he was doing in the very first month after getting the nomination?   Is this the last thing he should talk about?

      This makes it so hard (for me) to be FOR anyone in this wretched campaign.

      To end, "dora doo" put an excellent comment on my Kilkenny- letter page, re this 'inexperience' charge:

    Face it! The issue in this presidential election is not experience versus inexperience. McCain and Hillary have more political and governance experience than either Palin or Obama combined times 10. Yet with all her experience, Hillary didn't win her party's nomination.

     Democrats aren't looking for experience. If experience is that important, it doesn't make any sense to elect Obama (inexperienced) as president just to prevent Palin (inexperienced) from becoming president in the event McCain (experienced) dies in office.

    In any case, it's a position (none / 0) (#2)
    by andgarden on Mon Sep 08, 2008 at 02:23:55 PM EST
    apparently further to the right than George Bush's. I'm not sure how useful that is, because I barely understand the mechanics of this takeover myself.

    Naw (5.00 / 1) (#3)
    by Big Tent Democrat on Mon Sep 08, 2008 at 02:26:41 PM EST
    It is nonsensical really.

    She is saying the government has to takeover Fannie Mae and Freddie Mac because "it cost the taxpayers too much." Of course it is going to cost the taxpayers NOW, BECAUSE of the takeover.

    If she understood what she was saying, she would be opposing the takeover plan.

    The takeover plan is pretty simple really, as I understand it, it is basically a pre-packaged bankruptcy with the shareholders getting crammed down and the feds getting first position security for the new money.


    Actually, now I understand (5.00 / 1) (#4)
    by andgarden on Mon Sep 08, 2008 at 02:29:42 PM EST
    Her position is so incoherent that I thought she actually was opposing the takeover.

    The reverse apparently (5.00 / 1) (#5)
    by Big Tent Democrat on Mon Sep 08, 2008 at 02:30:27 PM EST
    Truly (none / 0) (#6)
    by Faust on Mon Sep 08, 2008 at 02:32:34 PM EST
    the Republican party is full of great LOL.

    Exactly why she is not doing press conferences (none / 0) (#7)
    by Jlvngstn on Mon Sep 08, 2008 at 02:33:46 PM EST
    and to the ready argument.

    cramer (none / 0) (#21)
    by jedimom on Mon Sep 08, 2008 at 02:56:15 PM EST
    Cramer lays the blame at the DEMS in Congress' feet and I would have to agree, they blocked meaningful reform of these GSEs for waaay too long and this is the result

    of course the proposed reforms by Paulson were aimed at limiting their 'portfolio'; which really does function as a hedge fund, (and Jim Johnson former CEO who works for Obama vetting could tell him all about it), but they could have passed reforms they wrote themselves.....

    200 billion off the cuff with more to follow

    Cramer is very liberal leaning and IIRC from the Kudlow & Cramer days took the DEM side..

    he calls them as he sees them and I agree with him

    Dodd is doing a hearing and the last Democrat I think should be asking the questions is a man who took a VIP loan from Countrywide who helped lead this subprime bubble to the popping point....

    let Charlie Rangel come out on this

    Cramer's Off His Rocker (5.00 / 1) (#43)
    by flashman on Mon Sep 08, 2008 at 03:43:07 PM EST
    And I don't believe for a second he is much of a democrat.  He's been a liberal fall guy for Larry Kudlow for years.  Fact is that the problems for these GSE's stem from the so-called 'subprime' lending market. The Republicans absolutely opposed any and all attempts to regulate these markets.

    I wonder if she also thinks (none / 0) (#23)
    by eric on Mon Sep 08, 2008 at 03:02:45 PM EST
    that all of those private Savings & Loans had "gotten too big and too expensive to the taxpayers," too.

    Shhh, the vibrations might knock over WaMu (5.00 / 1) (#25)
    by andgarden on Mon Sep 08, 2008 at 03:05:02 PM EST
    Nationalization of housing mortgages is good (none / 0) (#33)
    by hookfan on Mon Sep 08, 2008 at 03:19:23 PM EST
    Nationalization of health insurance industry is bad?
    Why is that? Current economics makes my eyes see double, my head twist around and around, my tongue hang out and my mouth drool.
       If one believes in free markets how is nationalization good? Or is it free markets are only good as long as they benefit the big boyz? I really don't understand at all. . .

    I believe they call it (5.00 / 5) (#37)
    by eric on Mon Sep 08, 2008 at 03:24:44 PM EST
    "Privatization of the profit and socialization of the risk."  AKA, Wall-Street Socialism.

    Exactly my thought (none / 0) (#54)
    by hookfan on Mon Sep 08, 2008 at 04:06:05 PM EST
    Except I would call it corporate wellfare.

    It is my understanding that most (none / 0) (#50)
    by Matt in Chicago on Mon Sep 08, 2008 at 03:56:17 PM EST
    Republicans want to nationalize Frannie and Freddie as a first step towards completely privatizing both.  Most of the Republicans I know, would prefer to have them operating as completely private entities as opposed to a GSE/quasi-governmental group.

    We might disagree with that proposal, but completely ignoring their point of view seems unwise.  

    Besides, it was my understanding that Congress in the 90's had "encouraged" both entities to make credit readily available to increase and encourage homeowner ship.  This kind of direct interference is only possible if with a GSE.

    Now having said all of that... THIS is the best "gaffe" we can come up with?  Things are starting to look desperate.


    Regulating Fannie and Freddie (none / 0) (#46)
    by Manuel on Mon Sep 08, 2008 at 03:46:24 PM EST
    The interesting thing isn't the bailout.  That is just a temporary reorganization.  The interesting thing is how we got here and the plan going forward.  We got here by privatizing the profits and socializing the losses.  There is probably consensus on all sides that this is a bad idea.

    On the long term fix there is going to be more debate.  Since the next administration will have to come up with the long term arrangement, it is important to understand what each side is proposing long term.  What Palin said appears to suggest privatization though it is too muddled to tell.  It would be wise for Obama to support not only privatization but robust regulation.  The inadequatre regulation under Bush, likely to be continued under McCain, is to blame for the financial crisis.  We need new regulatory ideas and McCain/Palin don't have any.

    Damn! You said that much better than I did :) (none / 0) (#51)
    by Matt in Chicago on Mon Sep 08, 2008 at 03:57:25 PM EST
    It's not clear (none / 0) (#57)
    by lizpolaris on Mon Sep 08, 2008 at 04:52:25 PM EST
    that Obama has new regulatory ideas either.  Effective government regulation used to be one of the standard Democratic party ideals but is it still?  Until we hear something, I don't like to assume...

    I am not sure about Obama either (none / 0) (#63)
    by Manuel on Mon Sep 08, 2008 at 05:11:17 PM EST
    but the long anti regulation track record on the Republican side can not be denied.  A President McCain will almost surely veto any concgressional attempts at regulatory reforms or oversight.  At the very least, he would weaken them.  A Persident Obama is less likely to do so.

    There's no way to be sure of that. (none / 0) (#68)
    by lizpolaris on Mon Sep 08, 2008 at 06:25:05 PM EST
    What in his track record ensures that he would veto any regulatory reforms?  Especially in light of this recent Freddie/Fannie government take over, until I hear what the plans are, I'm making no assumptions about either camp.

    Past history of other Republicans may not indicate what McCain will do in this case, similar to past history of Democratic policy may not indicate what Obama has said he supports.


    McCain's position (none / 0) (#70)
    by Manuel on Mon Sep 08, 2008 at 06:56:20 PM EST
    You can start here.  

    Financial Market Regulation
    While McCain has called for greater consumer education and enforcement of existing regulations, his advisers have argued against federal regulation, stating that "the government is not the solution to everything."  He says transparency would be his top goal in regulatory.

    My point was that Obama was more likely to support legislation from Congress offering new financial regulation not that he would necessarily lead it.  There are philosophical differences between the parties reagrding regulation.  This year, many of those differences work in the Democrats' favor.


    Now you've got exactly my point. (none / 0) (#78)
    by lizpolaris on Tue Sep 09, 2008 at 05:06:28 AM EST
    You are suggesting that Obama might be ok with government regulations if someone else leads the effort.  That is, as president, he might not veto it or may say he supports it.  And you base that assumption on the fact that the says he's a Democrat and in the past, Democrats supported government regulation.

    My point is that Obama's actions to date have shown that assuming he's going to support, agree with, or vote for the usual Democratic position on a given issue is not a certain thing.  We've even seen him vote against his stated Democratic-leaning position.

    So using Democratic policy positions as a guide to how Obama might vote or act in the future - especially in absence of a position from Obama - is not a reliable assumption, IMO.

    In contrast, you've just shown me a policy statement from McCain in which it states he's in favor of enforcing existing regulations and his future goal in regulation would be transparency.  That sounds like a good start.


    the gaffe stuff is well and good... (none / 0) (#48)
    by prose on Mon Sep 08, 2008 at 03:50:20 PM EST
    but its the lies that can really hurt them.

    We need to call them liars over and over again and we need to do it loudly.

    GSE's... (none / 0) (#69)
    by santarita on Mon Sep 08, 2008 at 06:25:28 PM EST
    have the implied backing of the federal government.  They are able to issue debt instruments at lower rates because the buyers (like China, Japan, etc) recognize that the US Gov't will step in and prevent loss of principal.  GSE's are (and should be) heavily regulated because the federal government (i.e.) taxpayers want to make sure that the guaranty is never called on.  Essentially the government, over the weekend, did what they had to do to assure investors that they would not lose principal.  

    The question for a long time was whether GSE's should be wholly private because of the implicit federal guaranty.  They were permitted to issue stock and to pay dividends.  So Fannie mae and Freddie Mac have been a hybrid for a longtime.  A true Republican would say eliminate the implicit guaranty and let them be totally private.  If they fail, let them fail.  Unfortunately. Freddie Mac and Fannie mae are much too big to allow to fail and  foreign governments have too much money in them to allow them to not protect principal.  So in a strained way, Palin was parroting a standard Republican mantra.  However, the time for that mantra has passed.  And so her comment was really quite silly.  The die is cast, the Rubicon has been crossed, the cows are out of the barn, etc.

    The interesting question is what will the next Administration do with two behemoths under its control?

    In other banking news: (none / 0) (#71)
    by steviez314 on Mon Sep 08, 2008 at 06:56:44 PM EST
    On Friday, the U.S. shut down Silver State Bank (Henderson NV), the 11th bank closed this year.  Until July 26th, Andrew McCain (John's adopted son from first marriage) was a director of the bank.  He resigned then for "personal reasons."

    Of course, everyone is saying they knew nothing about nothing, but I just thought I'd pass this nugget along.

    From Wiki: (none / 0) (#72)
    by Green26 on Mon Sep 08, 2008 at 10:59:44 PM EST
    "The FNMA receives no direct federal government aid. However, the corporation and the securities it issues are widely believed to be implicitly backed by the U.S. government. In 1996, the Congressional Budget Office wrote "there have been no federal appropriations for cash payments or guarantee subsidies. But in the place of federal funds the government provides considerable unpriced benefits to the enterprises... Government-sponsored enterprises are costly to the government and taxpayers... the benefit is currently worth $6.5 billion annually."

    "There is a wide belief that FNMA securities are backed by some sort of implied federal guarantee, and a majority of investors believe that the government would prevent a disastrous default. Vernon L. Smith, 2002 Nobel Laureate in economics, has called FHLMC and FNMA "implicitly taxpayer-backed agencies."[11] The Economist has referred to "[t]he implicit government guarantee"[12] of FHLMC and FNMA."