While we the people — through we the government – own the majority of GM and AIG, and a small share of most US banks, we completely own the GSE’s, that is the Government Sponsored Enterprises Fannie May and Freddie Mac. These institutions need a new charter, one that does not give executives and stockholders high pay and dividends when things go well and leave taxpayers footing the bill when they do not.
On Friday, the Republicans on the Committee on Financial Services have released a set of bullet points called “Goals and Principles for GSE Reform.” While the devil in legislation is in the details (not to say it isn’t also sometimes in the title too), the main points are right on track. The critical weak link in the release is: what is the mechanism that insures that we the taxpayers will not be bailing out these institutions again? Still, I am used to Barney Frank saying mostly the right things (post-crisis), and this document is on target and good to see. It makes one wonder what is taking the House so long to get a program in place? Oh, that’s right, I forgot, the parties can’t even agree on what to order for lunch.