How the Bush Administration keeps screwing the taxpayer

The first version of the TARF bill was very obscure indeed because Mr. Paulson (ex-CEO of Goldman) requested that he have a blank cheque version, full discretion and power about how to handle it. Plus, he requested that any legal action against him or prosecution had to be ruled out - that's the way terrorists negotiate in the show '24' - they're immune when striking deals. That's a strange thing to ask for from a Treasury Secretary - when he acts in good faith and uses his Harvard MBA trained brain, how could he screw up in a way to be prosecuted?

Beneath the 'secret' plan to buy $40 bil. a month troubled assets by the government through Fannie and Freddie on top of the $700 bil. exposure of taxpayers through the TARF bill. First of all, that will blow out the cost of any proportion (we are already at $2 trillion) but the obscure thing and much more troubling fact is since the bill was a lot about supervising Mr. Paulson - this is without any supervision. They can buy it at to high prices from people (Hedge Funds, Funds Goldman) who bought it at firesale prices and pocket huge profits without any risk on behalf of taxpayers.

I took the freedom to send this blog to Senator Obama and Senator McCain - let's see if they live up to their promise of change.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiR.qlNSX7.o&refer=home

Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets

By Dawn Kopecki

Oct. 11 (Bloomberg) -- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.

Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury's $700 billion Troubled Asset Relief Program.

The Federal Housing Finance Agency, which placed the two companies in conservatorship on Sept. 7, directed them last month to start increasing their purchases of loans and mortgage-backed securities as the Treasury seeks to absorb underperforming and illiquid assets from financial companies.

``For now, they're under conservatorship and they have to be used to keep the flow of capital going to the housing market,'' former Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television's ``Conversations with Judy Woodruff.'' ``They're important to maintaining the flow of government finance'' and need to be used actively, he said.

another excerpt from Bloomberg

but with false number - Fannie and Freddie have combined $5 trillion

Adding underperforming assets to Fannie and Freddie's combined $1.52 trillion mortgage portfolios would come at a time when the two mortgage-finance companies already hold as much as $210 billion of bad debt that may be eligible itself for the Treasury's relief program, their regulator said Oct. 5.