Not surprisingly buried amid the push for health carereform and the jobs bill was a statement from the administration that it wouldbe raising the assistance caps to mortgage concerns Fannie Mae and Freddie Mac.

Ever since the government placed the pair inconservatorship and the Treasury assumed a controlling stake last year,taxpayers have forked over some $111 billion to keep these failed albatrossesgoing since the federal takeover. And according to estimates from theCongressional Budget Office, the inept duo will siphon nearly $400 billion morethrough the year 2020.

Adding proverbial insult to injury is that Washington isnot accounting for the $1.6 trillion in corporate debt issued by these two, areason behind some reports claiming that the record-breaking $14.3 trillionnational deficit is probably closer to $16 trillion.

The CBO issued a statement last month that since thegovernment more or less owns Fannie and Freddie and hence they are now part ofthe government, they should be reflected in the federal budget.

But the truth is that since 1968 they haven't been,courtesy of Lyndon Johnson.

Citing the financial burden of the conflict in VietnamLBJ removed Fannie Mae - which began in 1938 as a New Deal creation - from thefederal budget and it morphed into what was later known as a GovernmentSponsored Enterprise- overseen bya government regulator, but operating like a private company with stockholders.

Two years after Fannie Mae was privatized, Freddie Macwas founded. And as recently as a few years ago, the two controlled about 90percent of the secondary mortgage market.

At this point I won't rehash the gargantuan accountingfrauds uncovered at each which should have shut down most companies, but someGOP lawmakers are pushing to change that clandestine accounting method.

Currently searching for co-sponsors is the AccurateAccounting of Fannie Mae and Freddie Mac Act. Authored by Rep. Scott Garrett,R-N.J., the bill would require that taxpayers get an accounting of theirliability to the housing concerns by mandating the Office of Management andBudget to account for the sustained losses of Fannie and Freddie since theirtakeover.

Unfortunately a number of lawmakers have opened theirmouths only to change feet in past defenses against the swelling and uncheckedportfolios of Fannie and Freddie most notably House Financial ServicesCommittee Chair Barney Frank, D-Mass., and New York's walking photo-op Sen.Charles Schumer.

If the current administration, which has been crowing forclose to one year about financial regulatory reform, is truly serious about it,the accurate accounting bill would be a good place to start.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access