WSJ Tearing Paulson a New Corn Chute
A taxpayer recap for Fan and Fred would be far different than most Wall Street deals. Typically, the banker's job is to balance the competing interests of the existing shareholders with the need to raise money at a price the market will bear. That can't be the priority here. If taxpayers have to ante up, the only justification is to protect the larger financial system. Existing Fannie and Freddie shareholders should be wiped out and managers and directors lose their jobs. We think Mr. Paulson should already have eliminated managers and private holders as a price of the recent bailout legislation. But if he lets either survive after taxpayers are forced to inject cash, the Treasury chief should be run out of town.
The "nationalization" has already happened. Paulson's clownish guarantee that's not a guarantee only solidified the notion that Fannie and Freddie have been made insolvent by the greedy, short-sighted gamblers running them. The stock would already be in the pennies if Paulson hadn't cooked up his pumping scheme with Daniel Mudd, and the bonds would have been dumped into the Pacific had they not sent a pacification team to Asia to reassure the bagholders there that American Taxpayers would compensate them for their foolhardy investments in the American Housing Ponzi Scheme of 200X.
Let a real nationalization happen for cryin' out loud. Wipe out existing equity. Force a haircut on bondholders in order to compensate the American taxpayers for the valuable (so far, unpaid) guarantee that Paulson has so unethically plastered onto Fannie's and Freddie's paper. Get rid of the clowns running the companies, replace them with trustees whose job it is to shore them up and get them ready to be chopped into pieces and sold back onto the market.
Get the government out of the wellspring position in the housing ponzi scheme once and for all, and let the risk takers out there -- instead of the taxpayers -- foot the bill for all the ignorance, greed, and idiocy that accompany periodic credit bubbles.