Wall Street Journal
written by Opinion Editorial
Wenesday January 27, 2010
Taxpayers may look at the unlimited federal credit line now enjoyed by Fannie Mae and Freddie Mac and see disaster. But New York Senator Chuck Schumer sees opportunity.
Yesterday he demanded that the two failed mortgage giants guarantee low rent for tenants in a Manhattan property they now own after the owner defaulted. As they say in Democratic Washington, a crisis is a terrible thing to waste.
Recently we told you about the Treasury's Christmas Eve announcement that after chewing through $111 billion from taxpayers, Fan and Fred can now consume an UNLIMITED AMOUNT of cash from the U.S. Treasury. The companies have been losing billions each quarter to serve President Obama's political goal of modifying troubled mortgages. They can lose still more by serving Mr. Schumer.
In truth, they already are. The New York lawmaker has pioneered the use of the Fannie and Freddie earmark, having successfully pressured Fannie to sell another property in the Bronx to an affordable housing group. But his appetite is growing for taxpayer cash to dole out to his constituents. Whereas the Bronx housing complex was worth a mere $29 million, Fan and Fred's interest in the mammoth Stuyvesant Town complex in Manhattan could run into the billions.
The New York Observer quotes Mr. Schumer saying that after Stuyvesant Town's owners defaulted, "Now Fannie and Freddie must guide this process to a conclusion with the least amount of impact on current tenants and families. I am going to watch them like a hawk to make sure they do just that."
While Mr. Schumer seems to have developed a nice racket, we can't help but wonder if Fan and Fred own any properties in the state of Nebraska. Can Senator Ben Nelson perhaps get a piece of this action?
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