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Back on Christmas Eve of 2009, Obama’s Treasury Dept. said it would lift the limits on what the federal government could provide in “emergency aid” to Fannie Mae and Freddie Mac – without seeking Congressional permission.

Very few reporters noticed, except for The Washington Post’s Zachary Goldfarb who reported the story on Christmas Day and CNBC CME Group reporter and tea party inspiration Rick Santelli, who later pleaded for the public to take notice. With that occurrence in mind, Santelli scoffed at Sen. Chris Dodd’s, D-Conn., legislative proposal of financial system reform that did not include reforms on both Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE).

“You know, I can't believe, first of all – you said, may not be included. They are not going to be included,” Santelli said on “Fast Money” March 12. “And I think to put a moniker of reform on something that doesn't include Freddie and Fannie is very disingenuous. And I think that to pass something – what I heard Mr. Dodd say, Sen. Dodd, was, you know, it’s the 101st senator. In other words, you know, we'll pass anything we have to show that we're doing something, no matter if it's the right thing or not, you know, I'm not buying that again.”

So how would Santelli solve the so-called Freddie Mac/Fannie Mae problem? He broke it down for viewers.

“Well, I think that I would break them up immediately and put them up for auction and privatize them or unwind it or officially nationalize them,” Santelli said. “But what I wouldn't do is completely ignore them and then after Christmas Eve enable them to issue debt, they're issuing reference notes between them and FHA, they're guaranteeing mortgages. This is truly still reprehensible. I don't think the average person out there realizes that the game is afoot. It's the same crap game, just a different alley. “

“Fast Money” panelist Joe Terranova said Fannie and Freddie own or guarantee over 50 percent of all home mortgages and asked if the time was right to “privatize them, nationalize them, address the issue.” According to Santelli, the time has been right.

“See, and what you asked is to me inherent in why they don't understand what caused the crisis and to pass anything is silly,” Santelli said. “You know, if it isn't the right time, what is? And what you're really saying is who else would possibly guarantee these mortgages? Nobody in their right mind, so we have to keep them going. Think about what you're saying. It sounds ridiculous.”

Santelli was skeptical that true reform would happen based on the federal government’s track record with TARP and the stimulus.

“I've been ranting for a year,” Santelli said. “You’d hope somebody would figure it out. I remember when Maria said they have to pass TARP. They passed it, took our money, and then says, ‘Oh we’re not really going to buy toxic assets.’ They passed the Recovery Act and said, ‘Shovel ready.’ The shovel was probably 45 stories from the dirt and here we're getting the same story again.”

 

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