Sunday, September 7, 2008

Fannie and Freddie Mac Commit Fraud, We Pay The Bill

"Then, last week, advisers from Morgan Stanley
hired by the Treasury Department to scrutinize the companies came to a
troubling conclusion: Freddie Mac’s capital position was worse than
initially imagined, according to people briefed on those findings. The
company had made decisions that, while not necessarily in violation of
accounting rules, had the effect of overstating the companies’s capital
resources and financial stability.

Indeed, one person briefed on
the company’s finances said Freddie Mac had made accounting decisions
that pushed losses into the future and postponed a capital shortfall
until the fourth quarter of this year, which would not need to be
disclosed until early 2009. Fannie Mae has used similar methods, but to
a lesser degree, according to other people who have been briefed."


"These two gigantic hedge funds intentionally
manipulated their accounting to show a capital position that was
stronger than reality, by pushing forward losses instead of recognizing
them as they occurred.

While not illegal, it had the effect of lying to the markets, which put both firms at risk of all-on collapse.

Now the government proposes to bail them out at your expense and risk the collapse of the government's funding,
instead of indicting the executives of these firms and placing them
into rundown, forcing the losses to be taken by the people who profited
from the gains during the "salad years.""

The Market Ticker

Aren't you glad we have a "free market capitalist" system, while those bad, evil Commies manipulate their economy? Well, OK, so the U.S. government intervenes here and there, but it's for the best. Why is it for the best, you ask? Well, that's because I assume the government is omniscient and incorruptible, and therefore smarter than the market.

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