A coworker came into my office yesterday afternoon and asked what I knew and/or thought of Freddie Mac and Fannie Mae being taken over by the government. Oh god... here we go again, and I was gonna' get mad. I hate - as much as anyone can hate anything - when the government steps into a situation and cleans up a mess of someone else's making. Except in the case of Freddie and Fannie, the idea that the government was "stepping in" wasn't so clear. So, I took a deep breath, tried to tell him what I knew of the history of both organizations (i.e. that they were created to give out and/or support people who would have trouble getting loans for homes from private institutions) and what seems to have been the reason why the Treasury Department decided to step in and "seize" their business operations. (I was and am angry because yet again, the average taxpayer is going to be financially responsible for devastatingly inept fiscal management and no one will be truly held accountable for making poor choices - i.e. let financial ruin of many of those involved ensue.)
This morning, I open up my news reader (these days, Google Reader) and see a blog entry over at Cafe Hayek from Russell Roberts on this very issue. Here is a taste:
"Once upon a time, Fannie and Freddie were partners in a business. Well, it wasn’t exactly a business. It was almost a charity. Not quite. It was sort of a government agency. Or maybe it was all three together. When Fannie and Freddie talked to investors, they acted like a business. When they talked to the government regulators, they acted like a government agency." (Who is to blame? by Russell Roberts)
Russell nails it better than I could have. Thanks to him to not only explaining a few details of the Freddie/Fannie debacle, but also for making the topic entertaining.
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