There Will be No Protesting Today

Fannie and Freddie join the Bush Family

The Bush Administration stepped in last week at what appeared to be an eleventh-hour during a top-down financial crisis that began long before the introduction of the sub-prime loans. Lots of reporters are vying to get more information on what the next steps might be, and there are thousands of hypothesis being created due to an altogether lack of information about what the government's next steps might be in their intervention.

The crucial thing to remember here--and why this is unprecedented--is that the government is literally stepping in to save Fannie/Freddie shareholders from terrible losses. Yes, a government is taking responsibility for public investors. Just so you know, the largest shareholders in Fannie and Freddie are mostly overseas governments, and here they are in ranking order: 1) China 2) Japan 3) Russia 4) South Korea 5) Taiwan...

Last week on the "Next Gen Webinar," I delivered a report on Fannie and Freddie, and posted a picture/article from the WSJ that was all about the Treasury Secretary Hank Paulson. I made a joke about how I would want to interview him, contrary to his closed-off demeanor to the public during a time when all that is wanted and needed is communication.

Well, Maria Bartiromo from Business Week must have read my mind, as she scored an interview with him. Never in my life--aside from interviews with Michael Jackson about his plastic surgery--had I read an interview with so many non-answers:

1) Are there plans afoot to take over Lehman...?
"I can't comment on any specific company in the news today."

Oh, you can't? As the Treasury Secretary?

2) Most Americans want to know when we will see this dramatic move to stop the slide in homeprices...
"I'm not prepared to project (this)...

Oh, your're not prepared to make projections? As the Treasury Secretary?

3)Is it fair to say, as the head of a private equity firm suggested to me yesterday, that this will cost taxpayers several hundred billion dollars?
"I certainly have not come up with that estimate."

That is actually his complete, verbatim answer there.

When the government intervenes it should be for the good of its public, not for the good of foreign shareholders. What's more, would it have been so terrible to let Fannie and Freddie fail? Rather than prop up a system of foreign investors using an already strapped population of taxpayers, there comes a time when it is best to admit that a system just didn't work, abandon it, and reinvent and evolve the system with new understanding.

The new, incoming administration, much like the American people, will be left to deal with a resolution once the unexplained behavior of this current administration. And as when we were appointed a president rather than voting for one, there will be no protesting today.