Freddie Mac CFO found dead, apparent suicide.

This seems like a relevant story, because we have not heard much from either Freddie or Fannie – two institutions that are dead center in the entire housing/financial collapse.

This morning the former CFO committed suicide. David Kellerman was only 41 and while it’s possible that personal issues could have played a role, right now it is safe to speculate that whatever mistakes Freddie made during the past few years could have generated enough guilt. I have no intention in trivializing the death of a human being or making such a serious matter political, one is left wondering just how dirty and corrupt the entire relationship between Fannie/Freddie and the government was.

Specifically their operating margins that made Bear Sterns look like a walk in the park, blatant lobbying of Democrats and some Republicans, guarantee from the government to back them with taxpayer money no matter the failure and their social engineering practices. Barney Frank can certainly blow wind on capitol hill and call out AIG CEOs, but only our politicians know the full extend of the Fannie/Freddie implication and how instrumental they were in causing our current crisis.

Perhaps some people on the inside know this all too well and have found such drastic measures as their only outlet. I would have much rather prefered that the man not take his life, but instead used the rare and valuable knowledge of a CFO to fully disclose the practices of the two largest mortgage buyers in America.

Obama to regulate our entire financial system, liberals launch new offensive.

A story in NY Times today suggests that plans by the administration will be unveiled soon detailing the most far reaching and intrusive regulations to date. The first sentence of the story sets the tone for what is sure to be a highly contested and controversial proposal.

“The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan”

With this introduction, banks and similar institutions that do not fall under the auspices of the TARP plan will be subjected to government oversight in all matters of compensation. Essentially our government will now be in charge of determining decisions currently being decided by industry experts and regardless of what noble intentions Obama has in mind, this cannot possibly end well.

This kind of intervention may very well have devastating results in the form of talent fleeing the industry and seeking employment in other countries or simply switching careers all together. Most notably, intervention of such magnitude will surely be justified as something sorely required using the explanation that deregulation caused our current crisis. Unfortunately this excuse resonates well with Americans who for the most part do not understand the complex world of credit default obligations, default swaps, derivatives and other tools of immense leverage. Of course this is by no means an attack against Americans, because frankly, why should they understand these concepts? It took hours of reading and listening to speakers for me to come close to understanding the concepts behind our meltdown and I can assure you that deregulation has very little to do with it.

America’s financial system has not been a free market system for a very long time, probably since the Great Depression when the first wave of immense regulation took place (and look how well that turned out). We have always suffered from a hybrid of free market and socialist principles and the government will never in a hundred years admit that they have as much to do with the current collapse as greedy Wall St. punks.

Barney Frank can certainly hold public show trials and demand AIG executives to be paraded in public, but it should anger every red blooded American in realizing that Frank was instrumental in preventing REGULATION of Fannie and Freddie, two companies that are the backbone of the housing collapse. When the GOP called for regulation of Fannie/Freddie, they did so because these two companies operated as government sponsored enterprises and operated with margins that doubled that of the most risky company, Bear Sterns. Yet, instead we get people like Jon Stewart whose ratings triple because he gets to skewer Jim Cramer on national television, on the grounds that some private companies acted recklessly and Jim failed to report it. However Jon completely ignored the two government sponsored enterprise (GSEs) that owned half of the entire US mortgage market and have since collapsed, siphoning almost 200 billion in taxpayer money. Of course he ignores it, obviously it is much more interesting to demonize AIG executives taking 100-200 million dollars than it is to explain what a GSE it’s responsibility in our housing collapse.

See, that actually takes time to research and guts to finally admit that government intervention, not a lack of regulation is the actual culprit behind our current demise!

The first steps to the bailout bill

The first 250 billion is now being allocated. So far I have mixed feelings about this.

I am elated that they are not buying up garbage (toxic) mortgages and instead using the money to inject the banks with liquidity. This is important as it guarantees their solvency and that banks will continue to operate. This should alleviate the credit crunch that is precisely what is grinding our economy into a halt. I assume however that this ownership is a temporary measure. We do not want our govt to dictate the bank’s policies – that will be a disaster. If they plan to do the same thing as Japan did, at the very least they can learn from Japan’s mistakes. Nationalizing banks must be a swift and temporary measure to provide confidence and a source of security to the ailing banks.

Buying up mortages is the worst thing they can do because it just rewards bad behavior. I heard talks that some Democrats proposed refinancing loans to a new lower adjusted rate. This is horse shit and if I ever hear McCain propose anything like this again, then I will never say one good word about him.

I am NOT elated to hear that no regulation is being proposed to prevent the market conditions that got us here in the first place. What should be done is a combination of the following:
- Income verification should be mandatory for mortages
- 15% minimum downpayment
- Privatize Fannie and Freddie, they should no longer be GSEs (as we can see government sponsored enterprises are crap). They should operate just like any other business.
- Revoke the Community Reinvestment Act. This is obsolete, gives ACORN and other filty community-organizing groups too much leverage and creates a lot of extra overhead for banks.

Democrats harped on and on and on about lack of regulation, yet they have introduced none of it! We are left paying for banks and no guarantee that the problem has been solved.

The government continues to impress us with their inability to solve anything. A sign that we should lay off some of them…permanently. History to me has shown time and time again that the best a government can do in such a crisis, is to stay the hell out.