Cramer: Fannie/Freddie Takeover a 'Home Run Plan'
CNBC ‚ÄúMad Money‚ÄĚ host Jim Cramer said September 8 that a federal bailout of beleaguered mortgage giants Fannie Mae and Freddie Mac is a ‚Äúhome-run plan,‚ÄĚ even though it could mean tens of billions of dollars in taxpayer money.
‚ÄúI am telling you that your house is going to bottom in price next year in part by efforts like this. It‚Äôs a home run plan,‚ÄĚ Cramer said on MSNBC‚Äôs ‚ÄúMorning Joe.‚ÄĚ He also called the plan a ‚Äúhome run‚ÄĚ on NBC‚Äôs ‚ÄúToday.‚ÄĚ
Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart announced September 7 the government would take over management of the government-sponsored enterprises (GSEs).
Cramer told ‚ÄúToday‚ÄĚ co-host Meredith Vieira that the takeover was a good thing even though it may end up costing taxpayers ‚Äútens of billions of dollars.‚ÄĚ ‚ÄúBut the government, the people are getting a stake in these enterprises. That is bullish so I think it‚Äôs pretty darn good,‚ÄĚ he said.
He told the ‚ÄúMorning Joe‚ÄĚ team the move could cost ‚Äúseveral hundred billion.‚ÄĚ But he said it would
‚ÄúOne of the things that happens is that you get into government and everyone thinks you‚Äôre a witch doctor ‚Äď you know what you‚Äôre doing,‚ÄĚ said Cramer. ‚ÄúThese guys were lazy, yes, lazy. They didn‚Äôt work hard, they didn‚Äôt make calls, they didn‚Äôt call people who knew things, they knew nothing, last year they started getting educated.‚ÄĚ
Cramer told co-host Pat Buchanan that Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron would be getting severance packages without further punishment because, ‚ÄúWhen you have a lobbying organization and a charity organization the likes of these two, which give tremendous amounts of money to Democrat‚ÄĒbig D‚ÄĒcauses, it tends to come back in your favor.‚ÄĚ
He added that if he were in charge he would have pushed for ‚Äúcriminal indictments‚ÄĚ because if Fannie and Freddie were run like any small business the IRS would not let them get away with lying about their accounting.
Cramer praised Paulson for cracking down on lobbying.
‚ÄúDo you think it could be because of all the money they‚Äôre allowed to give to the Democratic party? The first thing that Paulson did was say, ‚ÄėNo more lobbying.‚Äô Thank heavens.‚ÄĚ
Fannie and Freddie were ‚Äúwove a mantle of invincibility,‚ÄĚ according to The Wall Street Journal blog ‚ÄúDeal Journal.‚ÄĚ The blog noted Sept. 8 that the mortgage giants had $170 million in lobbying bills in the past decade and spent $3.5 million on lobbying just in this year‚Äôs first quarter, spreading their largesse among 42 outside lobbying firms.
‚ÄúWe need giant infusions of capital,‚ÄĚ Cramer said of Fannie and Freddie. ‚ÄúSo far every time anyone‚Äôs put money in or any country‚Äôs put money in they‚Äôve become big losers. This is the real problem in the system and it‚Äôs all being brought down by housing.‚ÄĚ