"You Underestimate My Sneakiness"

Christmas F Words:

Family, Friends, Fezziwig, Fireplace, Fa La La, Frosty the Snowman, etc.

This year, we got two more: Fannie and Freddie, the GSE’s that caught an unlimited bailout surprise this Christmas while no one was looking (or approving).  Geithner has authorized the removal of the $400 billion cap in terms of Treasury support for the lenders…just in time, as waiting until 2010 would’ve meant another trip through legislatorland for approval and abuse.

So now, the backing of FNM and FRE is explicit and unlimited through 2012.

I’m not angry about this (anymore), what would be the point?  The only argument for allowing insolvent Fannie and Freddie an unlimited backing from Treasury is that the rest of our financial institutions are laden with their paper, be it preferreds or bonds.  If we say we’re going to back that stuff at the federal level, then we have to back it.  Sure it’s grotesque, but to create another panic for the sake of taking the high road would be equally grotesque.

So we extend.

And if you had previously underestimated Geithner’s sneakiness, this should serve as a reminder…

Sources:

Timmy Hopes You Won’t See (Jr Deputy Accountant)

Treasury Uncaps Credit Line for Fannie, Freddie (Reuters)

Fraudie/ Phoney – What Does Treasury Know? (Market-Ticker)

Yes, the “underestimating my sneakiness” line is from Mr Deeds, how good was John Turturro as the sneaky butler?  I wish they didn’t put him in Transformers, it totally took away his cool factor, but wait, he was still The Jesus in Big Lebowski and so he is grandfathered in as far as coolness, he would have to start doing Sea Bond denture paste commercials to not be cool after Lebowski…wasn’t Turturro’s brother on Celebrity Fat Camp or something?  That was weird, and I think the sister was Tony’s sister on Sopranos, the one with the gun to her head and the Rolling Stones tattoo.