Friday, June 25, 2010

The beam that is in thine own eye

Democrats in Washington have come to an agreement palatable to the Congress, Senate, and White House on financial reform. No doubt some financial reform was needed; whether 2000 incomprehensible pages were needed is another story.

The good news about the banking sector is that (whether thanks to or inspite of TARP) the remaining banks are solvent, have not needed more bailout money despite the recession, and appear to be running normally. But two huge enterprises are still sucking up taxpayer money and barreling along toward financial ruin: Fannie Mae and Freddie Mac. Here's what the exhaustive, 2000-page financial diktat does to reform Fannie & Freddie: .

That's right, nothing. In fact, the Wall Street Journal notes, Government-controlled Fannie Mae and Freddie Mac remain a multibillion dollar drain on the U.S. Treasury, and largely untouched by this proposal. The Federal government contributed heftily to causing a housing crisis by pushing marginal buyers into homes for two decades, and guaranteeing their mortgages through Fannie & Freddie. They blamed Wall Street, are socking them with 2000 pages of fees and regulations... and leaving the beam in their own eye untouched.

On the upside, with the prospect of all those new regulations, fine print, and slogging court battles, financial lawyers everywhere just got expensive dinner reservations for their families to celebrate.

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