Because I subscribe to numerous services, I often get content from overseas. I have not yet reported on any overseas viewpoints, but thought that the article in the Economic Times - Gurgaon, Haryana, India, was noteworthy. Mortgages and securities are, after all, world wide. So for a change I thought I would share their viewpoint.

Quoting the article, they say: “Despite the fact that Freddie and Fannie are government sponsored enterprises, they are privately owned and enjoy special privileges like not having to register their securities with the government, not being liable to pay state and local income taxes, being conferred special treatment for investment purposes by bank regulators, etc.” It is funny what we learn by studying others – I was not aware that they did not pay state and local taxes. I was aware of their seemingly special status, being coddled by the government while they go about their daily business, opaque to those that should have the need to know.

India questions the practice of a private enterprise that is backed by a governmental entity. They see no equity in firms that are a privately owned entity subject to the discipline of the market place yet exude the aura of a government backed business, not subject to the laws of the marketplace. Indeed, if they truly were a private enterprise, a lot of this would not have happened. Wall Street watchdogs and analysts would have foreseen what was happening in a transparent business. One noteworthy thing here is that several foreign governments invested their foreign exchange reserves, and when the bottom fell out, the US government had to step in and lend a hand.

We can’t see a time when Freddie and Fannie will be up front and transparent, at least not under its current status. What we can do is watch as they over leverage their reserves and bring about a government bailout. And the thing that bothers me most is the foreign view of how we handle our money. They see private investors making money hand over fist from their dealings with the dynamic duo, and doing so because of the special privileges they enjoy because of our government backing. And in the final analysis, Mr. Average Joe down there on Main Street is going to have to pick up the tab. Show me the equity in that.