The silence of the Dems on Fannie and Freddie

This Fannie Mae home is just three blocks from Marathon Pundit world headquarters in Morton Grove, Illinois. There's probably one such home near where you live.

The quasi-government agency, long a hangout for Democratic political hacks, is one of the instigators of the recession we are suffering under. You hear plenty about the Bush-led AIG bailout from the Democrats, but not about Fannie and Freddie. The Chicago Tribune is right on top of the hypocrisy:

Now, contrast that brightening picture with the bleak state of Fannie Mae and Freddie Mac, the quasi-public organizations that are supposed to make housing more accessible and affordable. The terrible twins of mortgage finance were also taken over by the government as they slid toward insolvency in 2008. By the end of this month, they will have received $145 billion from taxpayers — and the final bill has yet to be calculated. Fannie reported a whopping first-quarter loss of $11.5 billion and warned the chance of making any profit was nil for the "indefinite future."

Fannie and Freddie got into trouble because they had an implicit government guarantee that allowed them to borrow money cheaply to lend to homeowners. The mortgage giants were on a politically popular mission to make housing more affordable to lower-income Americans. But Fannie and Freddie in their zeal loaned money to risky borrowers.

The Congressional Budget Office estimates that, without some radical changes, Fannie and Freddie could eat up $389 billion of taxpayer money by 2019.

Republican Sens. John McCain, Richard Shelby and Judd Gregg tried this week to cut the risk to taxpayers. They tried to include in the Senate financial reform bill a provision that would force Fannie and Freddie to stand on their own — without billions in taxpayer help. If Fannie and Freddie couldn't do so, they would be forced out of business in five years.

Meanwhile, the Democrats are pointing their fingers at Wall Street and big banks. They should be pointing those fingers at themselves.

Related post:

GOP senators calling for end to fed control of Fannie Mae

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