I Just Don't Know How We Can Keep Doing It
by James Glaser
February 19, 2009

You can say what you want, but I have to believe that President Barack Obama is spending money way faster than even George Bush ever thought of. It is February and Barack Obama became President just last month, and I can already tell the man has no idea of what a billion dollars is, let alone a trillion.

Last week President Obama signed into law a spending bill for $787 billion, and I would have thought he might take a breather, but no. Yesterday, he announced that he wants to give Freddie Mac and Fannie Mae another $200 billion so they can make more loans. I remember those two agencies got a bailout last fall, and I don't know if Obama's $200 billion is on top of what the Treasury Department gave them yesterday, but if I add it up, it looks like Obama is spending another trillion plus, on top of his stimulus package.

Wednesday, February 18, 2009, 2:50pm CST
Treasury ups Fannie/Freddie bailout funds to $400 billion
San Antonio Business Journal — by Bryant Ruiz Switzky

The Treasury Department is doubling its financial backing of mortgage giants Fannie Mae and Freddie Mac to $200 billion each, Treasury Secretary Tim Geithner announced Wednesday.
Washington, D.C.-based Fannie Mae (NYSE: FNM) and McLean, Va.-based Freddie Mac (NYSE: FRE) financed or guaranteed nearly three quarters of new home loans last year.
The two companies were seized by the government in September and put under the conservatorship of their regulator. At the time, the Treasury pledged to prop up the companies with up to $100 billion each to keep them solvent.
As of the fourth quarter of last year, Fannie has drawn on about $16 billion of its government backing and Freddie has used about $50 billion.
"The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners," Geithner said.
In addition, the Treasury Department will continue purchasing Fannie and Freddie mortgage-backed securities. It also will increase the allowable size of their retained mortgage portfolios by $50 billion to $900 billion, along with a corresponding increase in allowable debt outstanding.

However, don't think that is the end of our new President's spending. Yesterday, President Obama also came up with a new program to help out people who are losing their homes. This one is cheap.... only $75 billion.

I don't know if this new plan is a good one or not, but I do know the banks are going to make a lot of money from it. Here is how the White House explains what the bankers will get to modify a loan:

"Pay for Success" Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive "pay for success" fees — awarded monthly as long as the borrower stays current on the loan — of up to $1,000 each year for three years.

Now remember, we are talking about millions of loans. The President talks about 7 to 9 million loans. The White House says there is extra money for the home owner, too:

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

So if a homeowner in trouble does everything right, the American taxpayer is going to have to pay out an additional $9,000 dollars for each loan, plus the money the government will have to pay to get the homeowner's payment down to a manageable level. Like I said, we are talking millions of loans here. You just know $75 billion isn't going to come close to covering this program.

As I said at the beginning of this, I don't know how we can keep spending money like we are. What we are doing is stabbing our children in the back. We are telling them that we blew it, but we don't care, we want to live the good life we have always had. So we are taking their future, their money, and spending it on ourselves... and screw them.

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