Why is Greenspan so critical of the Freddie/Fannie bailout?
Best Answer
677 points
Dragonsbane answered 3 months ago …
I believe the technical term for it is privatizing the gains and socializing the losses. The shareholders and executives keep the money they made when times are good and the taxpayers eat the losses when times are tough.
The executives and shareholders of Fannie and Freddie made ridiculous amounts of money on the way up. These companies paid out billions of dollars in dividends to their shareholders and the CEOs there were paid 20M/yr (ballpark figure) to run these companies into the ground. If they had been more prudent in their risk assessments and lending standards, they wouldn't even need a bailout. Now why should my tax dollars go to prop up two companies that should be bankrupt?
Answers
139 points
mugsy answered 3 months ago …
Well said Dragonsbane! Freddie May and Fannie Mac have been deemed "too big" to go under and worsen the financial crisis even more. The higher up executives made all the outrageous sums of money and massive bonuses. Now they aren't paying any of that back. They new the huge risk associated to their company on the way up, but as long as they were getting wealthy way beyond their means, they don't care one sliver for the little guy when they go bankrupt or loose their homes. Some executives of some companies have been sumoned to court, but a very low percentage of those involved. after all, though it is unethical, for the most part what they have done is all legal and their tracks have been well covered.
Even if CEO's get "let go", they walk away with millions and many times they also get huge severence packages especially if they are forced to retire early. Yeah, you gotta feel sorry for them#*@!!
As Dragonsbane says, now the tax payer steps in to pay the bills. When the economy feels the pinch, the Feds print off more money to hand to the little people to "keep them happy"? so they can start to spend more, but by that time the average Joe, needs that money just to survive financially.
John Mugsy M.
