CNBC “Mad Money” host Jim Cramer said September 8 that a federal bailout of beleaguered mortgage giants Fannie Mae and Freddie Mac is a “home-run plan,” even though it could mean tens of billions of dollars in taxpayer money.
“I am telling you that your house is going to bottom in price next year in part by efforts like this. It’s a home run plan,” Cramer said on MSNBC’s “Morning Joe.” He also called the plan a “home run” on NBC’s “Today.”
Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart announced September 7 the government would take over management of the government-sponsored enterprises (GSEs).
Cramer told “Today” co-host Meredith Vieira that the takeover was a good thing even though it may end up costing taxpayers “tens of billions of dollars.” “But the government, the people are getting a stake in these enterprises. That is bullish so I think it’s pretty darn good,” he said.
He told the “Morning Joe” team the move could cost “several hundred billion.” But he said it would
“One of the things that happens is that you get into government and everyone thinks you’re a witch doctor – you know what you’re doing,” said Cramer. “These guys were lazy, yes, lazy. They didn’t work hard, they didn’t make calls, they didn’t call people who knew things, they knew nothing, last year they started getting educated.”
Cramer told co-host Pat Buchanan that Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron would be getting severance packages without further punishment because, “When you have a lobbying organization and a charity organization the likes of these two, which give tremendous amounts of money to Democrat—big D—causes, it tends to come back in your favor.”
He added that if he were in charge he would have pushed for “criminal indictments” because if Fannie and Freddie were run like any small business the IRS would not let them get away with lying about their accounting.
Cramer praised Paulson for cracking down on lobbying.
“Do you think it could be because of all the money they’re allowed to give to the Democratic party? The first thing that Paulson did was say, ‘No more lobbying.’ Thank heavens.”
Fannie and Freddie were “wove a mantle of invincibility,” according to The Wall Street Journal blog “Deal Journal.” The blog noted Sept. 8 that the mortgage giants had $170 million in lobbying bills in the past decade and spent $3.5 million on lobbying just in this year’s first quarter, spreading their largesse among 42 outside lobbying firms.
“We need giant infusions of capital,” Cramer said of Fannie and Freddie. “So far every time anyone’s put money in or any country’s put money in they’ve become big losers. This is the real problem in the system and it’s all being brought down by housing.”