WTF...I'm not the brightest bulb on the shelf, but I have two questions. 1. How the hell can the Fed take over Freddie or Fannie without Congressional approval? 2. Even with Congressional approval, what about the Fourth amendment which contains provisions against searches and SEIZURES?
GTS, the bailout package you are referring to, relatess to executive compensation. That's a separate issue. I was speaking about the overall takeover. Last time I looked this was still the United States of America, and the Constitution was still in place. 4Q
No, the boards approved the entire deal: http://online.wsj.com/article/SB122083060663308415.html?mod=hpp_us_whats_news "On Friday, Mr. Mudd, Fannie's CEO, and Richard Syron, Freddie Mac's chief executive, were summoned to FHFA's offices in Washington for separate meetings. Messrs. Lockhart, Paulson and Bernanke sat on one side of the conference room table. Company executives sat on the other side. Mr. Lockhart spoke first, telling the firms that they were going to be taken over. Mr. Paulson then told the executives they could go along willingly, or FHFA would declare them undercapitalized and take them over involuntarily. Mr. Paulson raised concerns about the companies' capital positions. The companies needed to take more reserves to cover mortgage-related losses, but doing so might have put them in violation of the standards that govern them. Mr. Syron was taken aback, according to two people familiar with his thinking. While the companies had expected Treasury to take some action, he didn't expect this. As of Tuesday, the Freddie board still had been whittling down the list of possible candidates for the CEO job, and was exploring other ways to raise capital on its own, according to one person familiar with the matter. Mr. Mudd said he would have to take the issue to his board, which he did the next day. Mr. Syron called a board meeting immediately after his FHFA meeting. "Paulson said, 'Accept or it will happen,'" Mr. Syron told the board, according to a person familiar with the matter."
I don't think this was a hostile takeover - they wanted to be bailed out. A better question is: Why should you and I have to pay for these idiots' mismanagement? Especially since the execs of these companies - who were responsible for this mess - walked away with billions of dollars of compensation that they will not have to give back? Remember all the talk around here of scam funds that just sell premium until their funds blow up? The fund managers say "oops, sorry" but keep all the money they made during the good months, while their investors lose everything they put in. Fannie and Freddie are the exact same thing - but on a scale so big it boggles the mind. By bailing them out we guarantee we'll see the same thing again and again. You get what you pay for.