Has America created its own variety of communism with the U.S. Treasury Departmentâ€™s bailout of two beleaguered government-sponsored enterprises (GSEs), Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE)? According to Rogers Holding CEO Jim Rogers, the answer is yes.
â€śAmerica is more communist than China is right now,â€ť Rogers told CNBC Europeâ€™s â€śSquawk Box Europeâ€ť September 8. â€śYou can at least have a free market in housing and a lot of other things in China. And you can see that this is welfare for the rich. This is socialism for the rich. Itâ€™s bailing out the financiers, the banks, the Wall Streeters."
Rogers, known for launching the Quantum Fund with left-wing heavyweight George Soros, said the bailout was not benefiting homeowners or helping average citizens improve their standing for a home mortgage.
â€śItâ€™s not bailing out the homeowners who are in trouble, by the way,â€ť Rogers said. â€śItâ€™s not bailing out people who want a mortgage â€“ itâ€™s just bailing out financial institutions. This is not my idea of the way things are supposed to be, but if thatâ€™s what America wants, you know, it can elect people who are going to do it. I think itâ€™s a mistake.â€ť
The Rogers Holdings CEO had little confidence that Democratic presidential nominee Sen. Barack Obama, Ill., or Republican vice-presidential nominee, Alaska Gov. Sarah Palin, would be able to do anything to steer Fannie or Freddie on a more stable path.
â€śThis is a big huge mess and neither one of them has a clue as to what to do next year,â€ť Rogers said. â€śBank stocks around the world are going through the roof, thatâ€™s because theyâ€™ve all been bailed out. You donâ€™t see the homeowners in Kansas going through the roof because theyâ€™re not being bailed out.â€ť
Rogers had previously called for Fannie and Freddie to be allowed to go bankrupt. â€śThey should not be bailed out,â€ť he told â€śWorldwide Exchangeâ€ť July 15. â€śThis is outrageous. Who are these people who are taking our money and doing this and ruining America?â€ť
â€śLet the patient go bankrupt,â€ť he said. â€śWe have courts in America; they will be reorganized.â€ť
Fannie Mae and Freddie Mac were â€śwove a mantle of invincibilityâ€ť through lobbying according to a September 8 Wall Street Journal â€śDeal Journalâ€ť blog post. According to the Journalâ€™s Heidi N. Moore, the mortgage giants had $170 million in lobbying bills in the past decade and spent $3.5 million on lobbying just in this yearâ€™s first quarter, spreading their largesse among 42 outside lobbying firms.
Earlier on September 8, CNBC â€śMad Moneyâ€ť host Jim Cramer called the bailout â€śa homerun planâ€ť on MSNBCâ€™s â€śMorning Joe.â€ť
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