1. You could have said the same thing about AIG , C(2009) or BAC (2009), even Bear Sterns before. I don't see a 3rd amendment in 2012 for other bail out recipients.
2.It's the government's job in a financial crisis to provide liquidity. At the time of the bail out both organizations were not insolvent based on the financials for 6/30/2008.
3. One of the prime motivations for the take over was to prevent Fannie and Freddie from raising guarantee fees and also to force them to continue buying bad mortgages since everybody else was only selling in late 2008.
4. If the government determined they were insolvent in 2008, then they had the obligation to do liquidate then. There is no do-over!
5. Once the government took over the management in 2008, all of a sudden "huge losses" start. They over-provision credit losses and then charge 10% on those" losses". See John Hempton's blog for November 2009.
6. These are quasi-utilities. They were restricted to basically mortgages and had to stay in the market or risk the political consequences. This is how they" paid" for the implied guarantee.
I would compare the bailout to the state of California's bailout of EIX and PCG during 2001.
7. Just as in 2001, illegal activity increases the losses. Instead of Enron this time it's every other major financial institution.
How much would the "losses" be reduced if the banks don't commit fraud. Now the government wishes to reward many of those same banks. It's rewarding the rapist, and throwing the victim in jail.
8. The treasury has admitted that the shareholders had subordinate claims after payback all the way up until 8/17/2012. Please read DeMarco's speeches and official treasury statements right after the bail out. They have an obligation not to mislead! If we can't trust our government- why invest in anything! Perhaps it's better to invest in Russia instead. If they can get away with 8/17/2012, then who is next!
