Shelby: We’re becoming the French

The Wall Street Journal reports that the FBI is probing the four companies at the heart of the recent financial failures;

The Federal Bureau of Investigation’s preliminary inquiries are focusing on whether fraud helped cause some of the troubles at Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and American International Group Inc., according to senior law-enforcement officials.

Lehman and AIG declined to comment. A spokeswoman for the Federal Housing Finance Agency, which regulates Fannie and Freddie and has both companies in conservatorship, also declined to comment.

The probes come as the huge potential tab for taxpayers in the crisis raises the stakes for the Justice Department. The FBI says it now has 26 companies under investigation, in addition to pursuing more than 1,400 mortgage-fraud cases nationwide.

While the Executive Branch flails about trying to find answers in this political, they lose another of their allies, Alabama’s RIchard Shelby, the ranking member of the Senate Banking Committee (WSJ link);

As a Republican, Mr. Shelby would normally be the one to defend a Republican president’s policies. Instead, he’s the leader of a mounting chorus of conservatives who think President George W. Bush has sold out conservative principles.

“I think we’re going down the road of France now,” Mr. Shelby told one television interviewer Tuesday, before quickly adding, “in all due respect for my French friends.”

Michelle Malkin cheers “Go, Shelby, go!”

As I’ve told others, this bailout will set precedents that will effect us long after the short term results are achieved. Government intrusions (like Fannie Mae and Freddie Mac) always turn out badly sooner or later.

Warren Buffet proves that there is indeed a private solution without the government by pumping $5 billion into Goldman Sachs (Washington Post link);

The investment by Buffett represents a major vote of confidence in the battered financial system from one of the country’s most respected investors.

Buffett has long touted the value of investing in well-known brand names such as Coca-Cola and Kraft because they can charge premium prices for their products and services. Goldman Sachs is no exception.

I guess Shelby’s point that we’re becoming like France goes to the issue of the government owning stakes in the affected companies. The government can barely get my mail to me on time, I surely don’t want them owning parts of private companies. Offering free taxpayer money to  Fred and Fannie certainly didn’t help them when they were over-extended. The proof that the Feds won’t do what’s best for the country is the fact that Paulson added provisions to include private loans and credit cards in the bailout over the weekend according to the Washington TImes;

Mr. Paulson was flummoxed after senators expressed outrage that he quietly expanded the bailout program last weekend, citing a Washington Times article on his plans to purchase student loans, credit cards, auto loans and other “troubled” bank assets besides mortgages. Mr. Paulson defended his assumption of broad powers to address the crisis.

It’s like Christmas, I suppose. When you talk about $700 billion, I guess a few thousand in credit card debt doesn’t seem like much to add. Congress wants to limit CEO salaries of the companies affected, and altough I agree with the principle, the long-ranging effects scare me. The whole thing is becoming a steaming pile and the market needs to work itself out while the Feds stop polticizing the whole thing. There are a lot of things the government shouldn’t do and this one of them.

Marooned in Marin has a video up (that went around the net yesterday while I was goofing off) from Jim Angle and Fox News explaining the Freddie and Fannie failures;

Notice how it’s easier to pass off bad debt when government money is behind it and we’re going to throw more federal money into the mess. It doesn’t make much sense to a little guy like me.

Category: Economy, Politics