Political Brinkmanship On "Financial Meltdown"
It's hard to tell if Sen. Richard Shelby is playing hardball or setting us up to get nothing out of congress on the GSE's. "'I will not support a bill that does not establish a regulatory structure with capital authority and enforcement powers that are needed to ensure the safe and sound operations of the GSEs,' the Senator said.
It is amazing how calmly the size of the problem is discussed. "Shelby also said he won't back legislation that doesn't give the regulator the ability to reorganize either company in the event of a financial meltdown." If Fannie or Freddie "meltdown", the world would likely go into depression!
Shelby also sees the insurance link. "His committee will continue to scrutinize the recently hard-hit insurance industry. 'I believe that we must closely consider the present regulatory regime to determine whether it is adequate to address current intricacies' of the insurance market. Many large financial institutions hold significant chunks of the $1.8 trillion in debt issued by Fannie and Freddie, so Snow and Greenspan have warned a crisis at either company could hurt markets."