Haste Lays Waste

I'm so mad, I could just spit. Or worse.

Even if I were a die-hard supporter of George Bush, even if I were his biggest fan, even if I thought the man could do no wrong - none of which is true - I'd hate him for signing this stupid housing bailout bill, which he's about to cop out and do.

The Congressional Budget Office has estimated this albatross could cost the taxpayer $25 billion. We're already running a record deficit, in case you hadn't heard. Honestly, if Bush really does sign this thing, I just may stop paying taxes forever. Or move to an ex-pat community someplace warm, for crying out loud.

This stupidity will supposedly help 400,000 homeowners avoid foreclosure. Plus, it'll provide $4 billion in aid to communities to fix up foreclosed properties so they'll sell. Bush was going to veto the bill on that basis, citing as his reason - correctly so - that it would aid lenders, but not homeowners.

How convenient. Homeowners are individuals. Lenders are institutions. Individuals vote. Institutions do not.

However, even on that point Bush lost his resolve. Why? Because he doesn't have the line-item veto, and the Dems cagily added Paulson's blank-check bailout request for Fannie and Freddie to their porky housing bill. So Bush acquiesced so that he can get Hank's flawed bailout plan through quickly. He's now established himself as being as big a pansy as Bernanke.

The rush to get all this done - Paulson was just conjuring up his ill-conceived Fannie/Freddie bailout plan a couple of weeks ago - hearkens to the days of the S&L crisis, when Congress rushed to provide legislative "fixes" that only made the problem worse.

All too often, a rush to judgment results in making a bad situation worse. Mark these words.

So, we're going to bail out 400,000 borrowers - irresponsible borrowers who over-leveraged themselves into mortgages they couldn't repay on houses they couldn't afford. And in case you haven't been reading this space regularly, kindly spare me the Chris Dodd crap about predatory lenders duping unsuspecting borrowers. If you're drinking that kool-aid, let me sell you some prime development land in western Kansas, complete with mountain views and white sand beaches.

We're going to bail out 400,000 irresponsible borrowers, and who knows how many rogue lenders stuck with foreclosed properties - a risk of doing the business they do. How are we going to do that? By increasing the burden on 117 million taxpayers. Yeah, that sounds fair: spare the 400,000 at the expense of the 117 million. What's that saying: "From each according to his ability, to each according to his need?" Who said that again?

This makes me want to puke. One article, in assessing the cost of this lunacy, noted that the cost of the additional borrowing the Fed has extended during this debacle is about $446 billion. The cost of increased financing to the Federal Home Loan Banks - part of Paulson's plan - is another $274 billion. The cost of shoring up Fannie and Freddie is another $621 billion. And the cost of boosting the FHA's lending authority is $90 billion.

Paulson wants a blank check for Fannie and Freddie, but says he won't need it. So why ask? It's like when I listen to the President say "your deposits are insured," then spend a weekend listening to first Paulson, then FDIC Chair Sheila Bair say the same thing. I don't remember the last time the US President, Treasury Secretary, and FDIC Chair all had to come out and reassure depositors that their money was safe. I'm guessing it might have been, oh, say 1930-something. What do they know that we don't (yet) know?

The Office of Federal Housing Enterprise Oversight - a special regulator set up just to pander to - ah, er, regulate Fannie and Freddie - recently reported: "To the extent that (other) institutions recognize losses on their private-label portfolios under GAAP, Fannie Mae and Freddie Mac may have to do so as well."

Say WHAT??

You mean Fannie and Freddie - both of which have bought some of the same subprime crap as the Wall Street firms who've taken $400 billion plus in write-downs to date - haven't yet marked their crap to market? Holy cow - these guys are likely insolvent already.

Paulson, in stumping for this socialist bailout, said "he would rather not be in the position of asking for government funds to support the GSEs," according to MarketWatch. "But," he said, "I am playing the hand that I have been dealt."

Great, Hank. But you're anteing up MY money. You'd better hope you're holding four aces, or we're all screwed.