Much has been written about the Too Big to Fail (TBTF) doctrine, but another category of untouchable institutions needs to be dealt with. Fannie Mae and Freddie Mae are the original "Too Politically Powerful to Fail" (TPPTF) powerhouses. Created by Congress decades ago, they enjoyed the implicit backing of the federal government and could borrow funds more advantageously than their private sector competitors. They protected themselves from Congressional oversight by employing well-connected elected and appointed officials from both parties. A 1996 Congressional Budget Office study concluded that the implicit government subsidy totaled $6.5 billion. On what has Congress done about these Too Politically Powerful to Fail government-sponsored enterprises, the US House passed on Dec 11, 2009 a massive bill aimed at TBTF, derivative regulation, systemic risk. It also would create a new Consumer Financial Protection Agency.
Bailout nation: Congress fiddles while Fannie and Freddie burn John Heasley Texas Banking; Mar 2010; 99, 3; Docstoc pg. 28 Reproduced with permission of the cop
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