Cramer: Fannie/Freddie Takeover a 'Home Run Plan'
CNBC âMad Moneyâ host Jim Cramer said September 8 that a federal bailout of beleaguered mortgage giants Fannie Mae and Freddie Mac is a âhome-run plan,â even though it could mean tens of billions of dollars in taxpayer money.
âI am telling you that your house is going to bottom in price next year in part by efforts like this. Itâs a home run plan,â Cramer said on MSNBCâs âMorning Joe.â He also called the plan a âhome runâ on NBCâs âToday.â
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 âTodayâ co-host Meredith Vieira that the takeover was a good thing even though it may end up costing taxpayers âtens of billions of dollars.â âBut the government, the people are getting a stake in these enterprises. That is bullish so I think itâs pretty darn good,â he said.
He told the âMorning Joeâ team the move could cost âseveral hundred billion.â But he said it would
âOne of the things that happens is that you get into government and everyone thinks youâre a witch doctor â you know what youâre doing,â said Cramer. âThese guys were lazy, yes, lazy. They didnât work hard, they didnât make calls, they didnât call people who knew things, they knew nothing, last year they started getting educated.â
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, âWhen you have a lobbying organization and a charity organization the likes of these two, which give tremendous amounts of money to Democratâbig Dâcauses, it tends to come back in your favor.â
He added that if he were in charge he would have pushed for âcriminal indictmentsâ 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.
âDo you think it could be because of all the money theyâre allowed to give to the Democratic party? The first thing that Paulson did was say, âNo more lobbying.â Thank heavens.â
Fannie and Freddie were âwove a mantle of invincibility,â according to The Wall Street Journal blog âDeal Journal.â 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 yearâs first quarter, spreading their largesse among 42 outside lobbying firms.
âWe need giant infusions of capital,â Cramer said of Fannie and Freddie. âSo far every time anyoneâs put money in or any countryâs put money in theyâve become big losers. This is the real problem in the system and itâs all being brought down by housing.â