New York Times "Dealbook" columnist Andrew Ross Sorkin was on TV recently complaining about the federal government's ongoing inaction with the now-nationalized Fannie Mae and Freddie Mac. Afterward, his phone rang. It was Barney Frank (pictured in the rogue's gallery on your right).
"I take offense at the idea that we've done nothing," he told me. Far from dragging its feet, he insisted, the government took the bold step of putting Fannie and Freddie into conservatorship in 2008. "There was no political fear to not do it."
I asked the question that I hear from so many Americans: Why hasn't the government tried to unwind and replace Fannie and Freddie, which have so far cost taxpayers $145 billion, more than any other bailed-out firm? [...]
"There is no urgency," he said.
"We've already abolished Fannie and Freddie," he said, referring to the government takeover. "Yes, we waited too long to fix it. But the money is not being lost by anything they are doing now."
You heard it straight from the horse's mouth: If the federal government gives implicit backing to a particular business sector, and that sector goes pear-shaped (i.e., prices contract after a record run-up), then the "fix" is nationalization.
So what passes for an exit strategy, then?
"Nobody in the private market thinks we're ready," he said, adding that whatever legislation is developed, it will be "for a postrecession world."
There's your federal government of 2010: Not just socializing risks, but nationalizing losses.
Sorkin's piece ends with a great little yin-yang between Frank and the Reason Foundation's own Fannie/Freddy-phobic, Anthony Randazzo.
Mr. Randazzo, whose foundation leans toward libertarian views, takes a much bolder step. "This means that prices have not been allowed to reach their natural bottom, from which a sustainable recovery could begin." And Mr. Randazzo wants to see housing prices truly bottom out.
But allowing the housing market to collapse simply so it can rise again — a very free-market approach — is politically unpalatable, especially as the nation's unemployment number still hovers near 10 percent.
"It's intellectually pretty difficult," Mr. Frank said.
Yes, yes it is.