The White House capitulated on the mortgage bailout bill, which now will become law, thanks to the “gullible” Treasury Secretary, Hank Paulson, who got Bush to cave in to the bill after earlier threatening a veto. Daniel Mitchell explains how this was a political blunder, but also part of a disturbing pattern on Capitol Hill. The mortgage bailout bill will spend many billions of dollars to bail out the government-backed mortgage giant Fannie Mae, which engaged in massive accounting fraud to enrich the liberal power-brokers who run it.
In the Washington Post, former Treasury Secretary Lawrence Summers argues that reform of government-backed mortgage giants like Fannie Mae is needed to reduce the risk that taxpayers will end up having to bail them out yet again in the future. Possible reforms include breaking Fannie Mae into “government and private components, the latter of which would be sold off in multiple pieces.”
Of course, Fannie Mae’s high-priced lobbyists would fight tooth and nail to prevent this from ever happening. Fannie Mae has never hesitated to use dirty and underhanded tactics to fight reform. Congressional leaders in the pocket of Fannie Mae blocked attempts to amend the mortgage bailout bill to place limits on Fannie Mae’s ability to lobby against reform in the future.