More than 2,000 Fannie and Freddie employees receiving salaries over $200K


IN FOCUS: More than 2,000 Fannie and Freddie employees receiving salaries over $200k

STEVE FORBES: What its proof of is that you shouldn't have government in this business in the first place. That's how they got bloated because they had an implicit government guarantee that's why they can pay these outrageous salaries. If these were 2 private companies, I wouldn't mind what they paid because if they are uncompetitive they would be allowed to go out of business. No bailout, let the markets work, let these guys compete. Either liquidate them or privatize them, don't keep them as government entities.

RICK UNGAR: I'm not going to start support those kind of salaries to anybody working in the government but its indicitive of a problem, not necessarily a problem of the bailouts. I have some real issues with the direction that Fannie and Freddie have taken. We have to be realistic about this. You have got about half of the mortgage debt in this country under the control on these two organizations. Had we let them go down the drain, real estate prices would have cratered anyone who owns a home would not have been happy with the financial result of how things went down. The bailout may have been ugly, but unfortunately it was absolutely necessary.

RICH KARLGAARD: I'll give my liberal friends credit here I think they had good intentions when FDR he started it back in 1938. In the 90s, Bill Clinton wanted to see lower income people become homeowners. That's a laudable goal but they couldn't pay the loans. You conceive of something in a boom time, and then in a bad time, it doesn't work. Here we have the government guaranteeing private banks making bad loans. It was a formula destined to go down. We should liquidate Fannie Mae and Freddie Mac at some point.

VICTORIA BARRET: It's this larger question of why is government in the businesses of propping up home ownership. It gets us into trouble again and again. These organizations and gone in and out of quasi private, quasi governmental status and the result is that there is not a lot of accountability. If these organizations were on the books of the U.S. government, it would make us look like Greece tomorrow. Instead they are in this Netherland, they don't have any accountability, so stuff like this happens where you have inflated salaries, it's inevitable.

ELIZABETH MACDONALD: This is why this is the biggest government stimulus program of all, Fannie Mae and Freddie Mac. People forget that this is stimulus; $5 trillion bucks is what was slew through Fannie Mae and Freddie Mac. Here's the problem, the president is railing about fat-cat pay on Wall Street but Fannie Mae and Freddie Mac were exempt from the pay czar, they are exempt from Dodd-Frank, they basically dominate 90% of the mortgage market they've got government backing, they don't have to compete those executives, they don't have to outperform. They make more money than their government overseer the Federal of housing financing agency. A government agency that is doing their job. They have directions there making millions of dollars. We should have reined these guys in a long time ago.

JOHN TAMNY: They have a bad history, and let's face it, we have always known this. They were never based on real market forces. If they were based on that these guys wouldn't be getting paid what they are getting paid because they would be fired by now. We have to liquidate them and also I'll point out to what Rick Ungar said about letting home prices fall. I thought the purpose of Fannie Mae and Freddie Mac if you accept their existence, which I don't, is to make housing affordable. We had a chance to make housing affordable, Rick is calling for Fannie and Freddie to prop up the home prices.

FLIPSIDE: Steve Forbes' plan to fix the fiscal cliff: pass a bill extending all cliff items for six months

STEVE FORBES: You don't poison the patient, you don't harm the patient. Right now this economy is getting weak. We have seen what higher taxes have done in Europe and southern Europe, severe recession. France and Germany about to go in recession, Japan already in recession, why would we apply the poison here? Put it off 6 months, see what's happening elsewhere. You don't put taxes on an economy that is contracting; this one is starting to contract. Why put poison in a patient? I don't get it.

ELIZABETH MACDONALD: I'm not for tax hikes or any of that but listen, if you kick the can, you get tangled up in mid-term elections and voters are never going to be ready reform or pay for entitlement reform. I'm not even saying do entitlement reform now; it took 2 years for the Reagan administration to do tax reform, and that was a real problem. The sell by date is long past due, on these types of measures that are needed to fix our fiscal problems in Washington D.C. The problem is that we are in an economic heir of falling expectations and that's got to stop in Washington D.C.

RICH KARLGAARD: The flipside to EMAC's argument is that you can pass a lot of bad bills. Nancy Pelosi said ‘pass the healthcare bill so we can see what's in it, ‘being a great example for the past few years. The big thing that we need to concentrate on is getting back to 3% growth. This 2% growth, all of our fiscal problems are going to get worse. We only have a prayer of supplying more jobs, bringing down unemployment and bringing down the debt and deficit if we have 3% growth or greater, so let's really think this through.

RICK UNGAR: listen I am very sympathetic to what Steve is staying, you've got complicated issues here. It's awfully hard to deal with them intelligently and we have days left. Lizzie is also right; you are getting closer and closer to the next election. They will wait until the last minute again; they won't confront the serious issues. We have to get this thing rolling; it's all we can do.

JOHN TAMNY: Steve is always right, and he is right here too. Haste makes bad laws, it gives us Sarbanes Oxley, it gives us TARP, it gives us Dodd- Frank. What markets like in the economy is gridlock. Let's push this into 2013 and hope they can't pass anything then. We are better off when they are not passing laws.

VICTORIA BARRET: I am in the odd position of agreeing with Rick Ungar and Nancy Pelosi, which is hard for me to do. It's true, we always do these things at the last minute, we don't make great decisions, but I don't have any faith that it will be any different 6 months from now. It's these stressful scenarios where decisions finally get made; they're not always great decisions but I don't see that changing in this administration and in this Congress.

Now tax dollars going to "eavesdrop" on people using public transportation

JOHN TAMNY: It's a horrifying blast to the iron curtain world of the past where brutal governments snoop on people. We are not subjects of the federal government; we are not subjects of city governments, they work for us. The idea that they become angels once they are in the government so they can look over us is a really scary thing.

VICTORIA BARRET: Oh please, a lot of crime happens on buses, I think it's a great idea that we have cameras in there. It's not like someone is sitting in a dark room watching every camera, on every bus. We are going to use the footage if something happens, and that's a great idea from a crime prevention point of view.

STEVE FORBES: This is big brother on steroids. So what's next in the name of fighting terrorism and crime? Put the video cameras in the bedroom and throughout the house? The ultimate 24-hour reality show? 300 million and you can see yourself. This is just bad stuff. It's one thing if you have probable cause, quite another if everywhere you go your are under the watch of big brother. Bad stuff.

RICH KARLGAARD: I'm a small- libertarian so I don't share the outrage like John Tamny and Steve on this. I just don't see the slippery slope. Vicky is right- the public transportation systems and subways in New York- we had a recent situation in New York where somebody was pushed. It's kind of nice to be able to catch people who do that.

RICK UNGAR: Steve Forbes is right! We are over doing it; we are going to become the problem instead of solving the problem. This is going too far, we need to chill out on all the invasion of privacy.

INFORMER: Best stocks to buy for the "Santa Claus Rally"?




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