McCain-Palin promise no bailouts like Freddie-Fannie

Republican White House hopefuls John McCain and Sarah Palin slammed the federal rescue of mortgage giants Fannie Mae and Freddie Mac as “outrageous” but needed in a joint editorial published Tuesday.

“The bailout of Fannie Mae and Freddie Mac is another outrageous, but sadly necessary, step for these two institutions,” after years of mismanagement, the pair wrote in The Wall Street Journal. “Given the long-term mismanagement and flawed structure of these two companies, this was the only short-term alternative for ensuring that hard-working Americans have access to affordable mortgages during this difficult economic period.” Presidential candidate McCain and his running-mate Palin called for permanent reform of the mortgage firms, saying that legislative failure led to “crisis management rather than sound planning.” If the Republican ticket were to win the White House, “we will make sure that they are permanently restructured and downsized, and no longer use taxpayer backing to serve lobbyists, management, boards and shareholders.” The pair warned that all federal spending would face scrutiny at the start of a McCain-Palin administration if they were to win the November 4 vote. “In the first 100 days of our administration, we will look at every agency and department and expenditure of the federal government and ask this simple question: Is it serving the needs of the taxpayer? If it is not, we will reform it or shut it down, and we will spend money only on what is truly in the interest of the American people,” they wrote. Under the plan announced at the weekend, Fannie Mae and Freddie Mac will get government-appointed chief executives and shed their mission of shareholder profit. The Treasury agreed to inject 100 billion dollars in each if needed. As expected, shares in the two firms were nearly wiped out in trade Monday — Freddie Mac plunged 83 percent to 88 cents and Fannie Mae slid 89 percent to 73 cents in closing trade. Overall stocks were higher, however. Fannie Mae was originally a government agency created during the Great Depression to help provide liquidity for housing. It was privatized in 1968 and Freddie Mac was chartered by Congress in 1970 to provide competition. advertising