by NW Spotlight
What Do Ralph Nader and Wall Street Fund Managers Have in Common? They’ve Both Been Defrauded by the Obama Treasury.
Having lived through the financial crisis and the Obama “stimulus” package, the thought of Uncle Sam as an equity investor or venture fund entrepreneur ought to scare the heck out of all of us. Whether it’s beating down GM shareholders to reward their union allies or pouring hundreds of millions into shaky solar companies aided by political cronies, the track record is abysmal for private investors and taxpayers.
Now, a fresh scandal – so far only limited to financial reporters at the New York Times and Forbes – is breaking open. The irony is that the one highlighting this scandal is none other than Ralph Nader, Wall Street agitator.
Fannie Mae and Freddie Mac were once independent – but government-backed – institutions responsible for supporting the mortgage market. They were solely financed by private investment. Those days are gone. The federal government bailed them out during the financial crisis and have erased the share values of every other private investor, including those they wooed in during the crisis to help rescue the institutions. Now, nearly every penny of profit from the $133 billion in annual revenue they generate goes directly to the Treasury to fuel the expansion of government. Essentially, the Obama Administration has nationalized the home mortgage market and is using the profits to fuel its broader agenda.
In a replay of the General Motors investor shenanigans, the Administration has told the 21,000 private shareholders who own 20% of the institutions that they are not eligible for dividends and, as a result, can’t dump their shares. Instead, the government is going to take all of the profits. That’s the risk a private investor takes you say? True. Yet, investors rely on factual and material information in order make their risk assessment.
Before and during the financial crisis, the federal government officials most responsible for the financial health of Fannie and Freddie were telling everybody that they were safe investments. Worse, having lured in investors with soothing words of “adequate capitalization” of the institutions, the Obama Administration then secretly changed policy to deny them any dividends. It was nothing more than an insider deal done between Treasury and Fannie and Freddie’s regulator. That’s right: Policy development and the regulator got together and just wiped out private investor shares. Big Government looking out for its own interests.
But, this is what happens when politicians use taxpayer dollars to take over privately-funded enterprise. It should never happen again. And we wish Ralph Nader luck in using Fannie and Freddie as the latest exhibit in why it shouldn’t.
We don’t know if there are any Oregon shareholders who fall into this category. If you’re out there, let us know!