Cutting Mr. Syron some slack
Freddie Mac chief Richard Syron is getting a bum rap.
I know that sounds a little unorthodox. Syron is catching no shortage of flak for ignoring warnings going back to 2004 about the bad loans Freddie was taking on. But our own Bill Bonner seems rather more sympathetic, responding to calls for Syron's replacement by saying, "Replaced? The poor man will also be harassed by the press and probably hounded by lawsuits. A hanging would be more humane."
That said, Syron appears more than capable of defending himself. From the Boston Globe:
Syron yesterday defended his loan decisions, arguing that Freddie needed to take additional risk to meet its government mandate to provide affordable housing. Although a private company, Freddie Mac was created by Congress to expand mortgage credit and home ownership.
"If you're going to take aid to low-income families seriously, then you're going to make riskier loans," Syron said in an interview yesterday. "We have goals to meet."
Exactly. Syron was doing exactly what he was hired to do — to grease the skids for George W. Bush's "ownership society" by putting warm bodies in owner-occupied homes, even if those "owners" had no equity, or even negative equity.
Could Syron have acted more "responsibly?" Of course, but that would have meant shutting off the spigots of easy mortgage financing to those regions where housing was becoming overpriced — which was damn near everywhere. Imagine the howls that would have emanated from Congress if he'd acted "responsibly."
Syron's a small fish in this scam. Put the blame where it belongs — on Congress, on FDR for forming Fannie and Freddie in the first place, and on LBJ for turning them into the hideous public-private cross-breeds they are. Oh yes, and the Treasury and the Fed for enabling their blank-check bailout, which is sure to trash the dollar even more than it's been already.
Speaking of which, our clever friends at Everbank have come up with a new way to shelter yourself from the falling dollar. It's called the Debt-Free Index CD. These FDIC-insured CDs put you in five currencies backed by governments that run budget surpluses, or are in countries rich with commodities.
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I do like this site, but, I’m getting tired of you blaming the wrong guys. I think FDR realized that representative democracy could not survive when a tiny proportion of the population controlled a majority of the countries wealth. You seem to think differently. I don’t concur with you. In fact I think your way leads to destruction. The wealth of a nation needs to be shared for all to thrive. That means the high incomes need to be striped, pared down so that the country can remain solvent and not collapse. It’s kind of like tough love. Regards, Eric Swan
Comment on August 8, 2008 @ 5:32 pm
Admit it, Erich…you’re a socialist.
Regards,
Dan Slocum
Comment on August 8, 2008 @ 5:55 pm
Dan commented incorrectly…it’s Comrade Eric.
Communist
Comment on August 9, 2008 @ 5:16 am
Boo FDR
Comment on August 9, 2008 @ 12:32 pm
Eric,
The U.S. was founded by business men for the freedom to conduct business, not to monitor and dictate acceptable levels of prosperity. The founders could have stayed under British rule if they wanted 5 weeks vacation, health care, and minimum wages. All they had to do was form USA workers union to get benefits from the British.
All of this is my own interpretation.
Comment on August 9, 2008 @ 1:19 pm
Hare
Um, no. The British government specifically did not want American (or British) workers to get vacation, health care, or minimum wages. Read Adam Smith on what the British government wanted, the tariffs, the prohibitions on manufactures in the US or other colonies, etc.
It was strictly about squeezing as much money out of the colonials as was practical, or more than was practical.
The Revolutionary war started because the British government imposed a very high income tax on colonial farmers by prohibiting the colonials from exporting food to any other country except Britain and taxing it when it came into Britain, and prohibiting the colonials from importing manufactures from any country but Britain, or manufacturing commodities on our own.
Comment on August 9, 2008 @ 11:52 pm
As misguided as Eric is in how he would solve things, he does have a point:
The fascist business model surely has worked to redistribute wealth from the bottom-up, in no small part due to what Ludwig v. Mises pointed out as one of the major flaws of money creation / inflation.
And a real democracy we have not been for a long time, with the duopolistic monopoly we call the Dems and Republicans.
Comment on August 10, 2008 @ 1:02 am
Oh and I forgot, FDR is most certainly one of the main culprits of our malaise, as are Wilson, and Johnson.
FDR:
stole our gold
prolonged the depression
subverted the constitution
maneuvered us into a most disastrous war (even if we won it, at what cost)
Comment on August 10, 2008 @ 1:07 am
100% responsibility is the only answer. Blame is a waste of time. We the people (us Americans) are the ones who elect our representatives. We ask the government to help, protect, bail us out, etc. WE are the cause of all of our problems… we’ve made this Frankenstein. Unless we become educated, responsible, vigilant, participative in our local, state and federal affairs, etc. we are not capable or deserving of being in a democratic republic. This culture and civilization is on its way out, hopefully we will rebuild into a higher level form.
Comment on August 10, 2008 @ 11:38 am