Cutting Mr. Syron some slack
Freddie Mac chief Richard Syron is getting a bum rap.
I know that sounds a little unorthodox. Syron is catching no shortage of flak for ignoring warnings going back to 2004 about the bad loans Freddie was taking on. But our own Bill Bonner seems rather more sympathetic, responding to calls for Syron's replacement by saying, "Replaced? The poor man will also be harassed by the press and probably hounded by lawsuits. A hanging would be more humane."
That said, Syron appears more than capable of defending himself. From the Boston Globe:
Syron yesterday defended his loan decisions, arguing that Freddie needed to take additional risk to meet its government mandate to provide affordable housing. Although a private company, Freddie Mac was created by Congress to expand mortgage credit and home ownership.
"If you're going to take aid to low-income families seriously, then you're going to make riskier loans," Syron said in an interview yesterday. "We have goals to meet."
Exactly. Syron was doing exactly what he was hired to do — to grease the skids for George W. Bush's "ownership society" by putting warm bodies in owner-occupied homes, even if those "owners" had no equity, or even negative equity.
Could Syron have acted more "responsibly?" Of course, but that would have meant shutting off the spigots of easy mortgage financing to those regions where housing was becoming overpriced — which was damn near everywhere. Imagine the howls that would have emanated from Congress if he'd acted "responsibly."
Syron's a small fish in this scam. Put the blame where it belongs — on Congress, on FDR for forming Fannie and Freddie in the first place, and on LBJ for turning them into the hideous public-private cross-breeds they are. Oh yes, and the Treasury and the Fed for enabling their blank-check bailout, which is sure to trash the dollar even more than it's been already.
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