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This is my effort to share my thoughts with readers about concerns facing our country today.  I believe there is a good chance my grandchildren may be the first generation in the history of this great country not to have a better standard of living than their parents. If so, our generation is to blame. The clock is running out for damage control. .

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« Where Have the Oil Speculators Gone? | Main | Federal Bailouts are in Vogue »
Wednesday
Sep102008

Ken Lay and Barney Frank

Ken Lay was the CEO of Enron. He lied to shareholders and Enron went bankrupt. It was the biggest bankruptcy in U.S. history. Ken Lay and several of his people were convicted. Ken died before he went to prison. Our government destroyed Arthur Anderson a fine firm and basically called it collateral damage. So many congressmen were so indignant about the behavior of the Enron top people.

Now comes Fannie and Freddie. Basically they are just as bankrupt as Enron. But, you as a taxpayer will bail them out. The two CEO's of the companies are getting nice severance packages well into the millions. The damage to investors will be ten times a great as Enron. Many banks holding Fannie and Freddie preferred stock may still fail. Private investors were being encouraged to buy stock as recently as last month to help get them though their problems. Basically, both companies are government corporations. Otherwise, why would you be asked to bail them out with your tax dollars.

I just wonder why the actions of Barney Frank, congressman from Massachusetts is not undergoing the same wrath as Ken Lay and his counterparts. Here's why I ask that:

Beginning in 200 when Mr. Frank said there was "no federal liability  there whatsoever" when he dismissed a bill to reform Fannie and Freddie. Two years later, he said no problems exist with either company. On the floor of congress. In 2003, he was quoted again: "no Federal guarantee with either". When the accounting scandal broke that same year-'there is no crisis". In 2004 when Fannie said they had a multi billion-dollar "misstatement" he said they were no risks for shareholders. He said " Wall Street will get over it" if they collapsed. In 2007 Mr. Frank in charge of the House Financial Services Committee saying he had long favored reform for Fannie and Freddie. This despite the fact he had been on record opposing every bill to reform them. His lies are part of the Congressional Record. No testimony needed. Last year Mr. Frank pointed out, he liked both companies because they were subject to his direction, unlike the private sector. 

Is this behavior any different than the behavior that send Lay and his minions to jail? Just wait. Frank pushed through the acts that set an increase in the conforming loan limits, thus letting them take on riskier sub prime mortgages. Not satisfied, the set up the "affordable housing" trust that let him and other politician syphon off funds for special interests. At least $500 million as far as the records show.

So, the two CEO's get off scott free with millions of your tax dollars to pay their severance. Mr. Frank who defended the bad practices of Fannie and Freddie to the end and put into place the mechanisms that helped them fail faster and actually syphoned off money for special interests goes on his way and will be reelected. 

Begs a lot of questions, doesn't it? First, do you want Obama to grow government so he and the Barney Franks of Washington who can't run anything can lie to you and Wall Street to foster more incompetence? Second, why bail them out? Barney and the boys will just screw  them up again. Third, why isn't their a Congressional Investigation of Barney and all the other Barneys' who did this to the shareholders, the banks, and you, the people? You get the bill for all of this.

Why shouldn't Barney go to jail and share a cell with Jeffery Skilling?

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