Fannie and Freddie Mac have been taken over by the federal government
—the largest bailout EVER! That means, dear reader, that you and I are stuck with a massive tax bill. Ka-Ching! Congratulations to us…the suckers.
For decades, libertarian think tanks like the
, have sounded the alarm on the potential hazard of having giant government sponsored enterprises (Fannie and Freddie) continue to operate too cozily to the federal government. Of course, calls to completely sever the two GSE’s from any Federal protection and advantage were always met with resistance from the left side of the political spectrum. No surprise there. Fannie and Freddie were therefore encouraged to reckless expansion as they took on more and more risky bundles of mortgages from lenders in order to swap them for mortgage-backed securities. But so what right? They’re doing it for the public good and people need housing even if they can barely afford them. Besides, the federal government has their back.
The hapless figure in all of this is Treasury Secretary Henry Paulson who a while back had
offered the beleaguered GSEs and their patrons in Congress a blank check
signed by the taxpayers promising potentially unlimited funds to backstop the lenders. House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd thought that this was a wonderful idea. Mr. Paulson has obviously acquiesced to the Democrats and the mindset that exists in
All of this is the latest example of the waste, crony-capitalism, political trading, and bureaucracy that has gripped