This is the Cato Daily Podcast for Monday, July 19th, 2010. I'm Caleb Brown.

The Financial Sector Reform Bill was thousands of pages but somehow missed removing the special favors

for so many of the key players in the housing meltdown and the financial prices.

Mark Calabria, Director of Financial Regulation Studies at the Cato Institute, comments.

Interestingly enough, the only times that Freddie and Fannie are mentioned in the Dodd-Frank Financial Services bill is when they continue to get

carved out in special exemptions.

In terms of actually dealing with the problems of Freddie and Fannie that led and contributed

to the crisis, there's a completely left out of the bill.

What are some of the carve-outs and exemptions that they've got?

Well, for instance, there's a well-known new consumer protection agency that's in the bill that's

supposed to protect us from the next crisis. Interestingly enough, Freddie and Fannie, as well

as almost anybody except for maybe mortgage brokers, almost anybody who had anything to do with

the crisis is carved out of the bill. So you know all these protections from new mortgages

and credit cards and financial products well for any and Fannie have an explicit

exemption from that. So that's one part of the bill they're exempt from. There's also

the well-known vocal rule that is supposed to limit the proprietary

trading which is the true trading that investment banks do on their own account. Well,

there is an exemption from proprietary trading if one of the instruments your proprietary trading is Freddie and Fannie securities, which interestingly enough, most of the proprietary trading that got Bear Stearns in trouble was proprietary trading in Fannie and Freddie

securities.

So there's a lot of carve out there that they're treated special throughout various

parts of the bill.

You know, they're not covered by various parts of it they're given other

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