By Hans Bader
Earlier, The Washington Post reported on how the Obama administration pressured Freddie Mac not to disclose to investors and the SEC the $30 billion in losses it was incurring as a result of Obama’s mortgage bailouts for undeserving (including high-income) borrowers.
Now, Bloomberg News reports that then-Federal Reserve Bank head (and now Treasury Secretary) “Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis,” and to hide them from the SEC in its SEC filings. Such conduct is not too surprising coming from Geithner, a sanctimonious and hypocritical tax cheat. Geithner also used the government’s bailout of AIG to pay billions of dollars to the wealthy Wall Street investment firm of Goldman Sachs, money that it neither needed to stay afloat, nor was legally entitled to.
Earlier this year, Freddie Mac’s CFO killed himself amidst a sea of red ink, as the administration forced Freddie to run up losses on mortgage bailouts, even though economists and real estate experts have criticized those bailouts as harmful to the economy. Now, the Obama administration is making Freddie Mac and Fannie Mae deliberately run up losses on bailouts and buying up risky loans, even though the government took over Fannie and Freddie in 2008 in the name of ending their risky practices. It is rewarding their executives for carrying out such terrible policies by showering them with multimillion dollar pay.
But Obama’s proposed financial rules overhaul does absolutely nothing about the risky practices of Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”
Instead, it pressures banks to make even more risky loans. The House has approved Obama’s proposal to create a politically-correct entity called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.” The Community Reinvestment Act was a key contributor to the financial crisis. But the administration’s proposal would direct the new agency to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.