"Fannie and Freddie need to be rethought entirely, if not eliminated outright."


Housing affordability is a "market failure"! Housing affordability is a "market failure"!

The Bush-Obama, Paulson-Geithner, Republican-Democrat policy of having the federal government dominate the mortgage finance business until the Singularity reunites Christ with Valentine Michael Smith has lost the editorial board of USA Today:

As bailouts go, nothing quite matches the torrent of taxpayer money still pouring into Fannie Mae and Freddie Mac, the housing giants that now guarantee nearly half of the nation's $11.7 trillion in mortgages.

To cover loans that go sour, the federal government has already doled out almost $145 billion, and the non-partisan Congressional Budget Office estimates the final tab will be about $381 billion. […] [M]ost of this money won't get paid back. And even now, there's little talk in Washington about how to fix the problem. […]

Good old Timmy Geithner. How I hate him!

[They can't go on] forever as wards of the state, soaking up taxpayer cash. They also should not be allowed to go back to their unusual former status as publicly traded companies that are also "government-sponsored enterprises." That's why they got in trouble in the first place, paying outsized compensation and backing risky mortgages because politicians of both parties prodded them to do so.

Fannie and Freddie need to be rethought entirely, if not eliminated outright. And the time to start planning for that is now. […]

Their "American dream" mission of profitably making risk disappear, so that banks would lend and people could buy their own homes, was always a fantasy. They merely took risks from banks and piled it on the taxpayers. Now everyone is paying the price.

Whole thing here. As Tim Cavanaugh put it last month

We can't go on like this. Leaving taxpayers on the hook for this continuing disaster isn't just unfair. It's economically ruinous. And nobody in the Treasury Department, the Fed, or the administration has anything resembling an exit strategy.

More Reason on Fannie/Freddie here, including the Reason Foundation's Anthony Randazzo succinct point in March: "It's time to kick Fannie Mae and Freddie Mac out of the housing market."

NEXT: Mickey Kaus on How Unions Killed the Democrats, Immigration, New Media, & Bringing the Velvet Underground to Beverly Hills High

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  1. When you’ve lost USA Today, you’ve lost the hotel hallway floor.

    1. Hotel hallway floor is an exciting place for an erotic scene, but never as exciting as a train.

  2. LOL, man that sure is one goofy looking dude. I mean seriously LOL


    1. I see the Skynet has deprogrammed your compassion AnonBot. That poor guy is having a stroke.

      I suspected the Harry Potter series was some sort of Marxist allegory with magic.

    2. So I’m changing my name to Fannie Mae;
      And I’m heading down to Washington D.C.
      I’ll be glad they’ve got my back,
      ‘Cause what they did for Freddie Mac
      Will be perfectly acceptable to me!

    3. So I’m changing my name to Fannie Mae;
      And I’m heading down to Washington D.C.
      I’ll be glad they’ve got my back,
      ‘Cause what they did for Freddie Mac
      Will be perfectly acceptable to me!

  3. This is the death of third was socialism. First way was just let the market alone. Second way is communism and have the government provide everything. Third way that was tried in Europe and the US is to let the market provide goods but then try to dictate and equalize the outcomes by subsidizing things.

    We have found out in the last five years is that third way socialism produces asset bubbles. And it doesn’t really improve the quality of life. Yeah, giving away free money so every one can own a house or go to college sounds great. But what happens is that the suppliers of those goods just raise their prices accordingly. Yeah, the Freddie Mac loan seemed great when you got it. But twenty years later we end up with everyone paying 50% of their net income on housing. Same with education. Who doesn’t want to give people aid to go to college? All we have accomplished is to put our young people in debt and make college completely unaffordable.

    1. But if college is affordable, what will the journalists write about? Think of the journalists!

    2. Happens every time Government tries to determine winners and losers, John.

    3. “First way was just let the market alone.”

      That never happened.

  4. Welch, Cavanaugh, and Mangu-Ward need to have an alt-text competition.

    1. Why do you assume we’re not already?

      1. Usually you open the judging of that sort of thing to the commenters. I can only guess that you didn’t in this case because the prizes are either really great, or illegal, or both.

        1. I can only guess that you didn’t in this case because the prizes are either really great, or illegal, or both.

          I heard from a very reliable source that the prize is sexual favors from the losers.

    2. I think Bailey has ’em both beat. He is a master of subtlety and irony. His highbrow approach is in direct contrast to Welch and Ward’s play to the lowest common denominator. In short, Bailey is the thinking man’s alt-texter.

      1. Ron, I told you to stop commenting under an alias.

        1. Who’s commenting under this one? KMW?


  5. This is what I have been thinking lately: Geithner, Bernanke, et al, are actively trying to destroy every last vestige of the “culture of saving” in this country.

    1. The correct term is “hoarding”, not “saving”. Please update your vocabulary as this is your final warning.

    2. “credit is the lifeblood of the economy” LIFEBLOOD!!!!!
      Spend, pussycat, spend!!!!

  6. “Fannie and Freddie need to be rethought entirely, if not eliminated outright.”

    The U.S. needs to cut their losses. Kill Fannie and Freddie with extreme prejudice. Burn the damned villages to the ground and salt the earth from which they sprang.

    If somebody else want to get into the business of guaranteeing mortgages for a cut, let them. That probably won’t happen and lenders will start requiring that borrowers put 20% down and have a real job before assuming the risk.

    Irresponsible people will have to rent and speculators will have to find some other sector to gamble in.

  7. “Fannie and Freddie need to be rethought entirely, if not eliminated outright.”

    May I suggest that the precedent of Philip IV v. the Knights Templar be followed?

    1. I would love it if some politician would end all his speeches with “Furthermore I think Fannie and Freddie must be destroyed”.

      1. “Fredo esse delenda”?

        1. I thought Al Neri already delendaed Fredo.

          1. That meaning also occurred to me and the notion of rowing them out into the middle of a lake and putting a bullet in the back of their heads is also apt.

            However, I went with “Fredo” because I couldn’t figure out how to form the dative case of “Fannie”.

            1. What’s Latin for ass? As in the body part?

              1. David Weigel

              2. Which part? Gluteus maximus and minimus are the ass muscles, commonly know as “buns” or “junk in the trunk.”

                1. The part where the shit comes out. That’s what’s known as the David Weigel.

                  1. I thought MNG was “The Shit Facktory.”

                2. I was thinking more colloquially.

  8. Waaaaaaaay off topic: Gawker plans to disrupt Rush Limbaugh’s wedding.

    But a fan of RL at all, but it’s still a dick-move.

    1. All I could think was “Take out the biggest and loudest one and the mob will disperse.” But then I RTFA’d and ruined the fantasy of sniping Gawkonians from rooftop.

      1. That is a good fanasy. All of them in one place with a good field of fire and a solid high place to lay prone. You could sell tickets to that. It would be the greatest amusement park ride ever. Call it douche shoot.

      1. Bad htmliethingie Was supposed to be “I heart Rush”

    2. I’ve disrupted weddings with dick-moves before. It’s fun.

      1. I have no idea why Limbaugh would want to get married again for a fourth time…

        He’s a conservative, they’re big on family values.

        1. Does he really believe in that ‘don’t put your dick inside of a vagina or any other orifice until Yahweh signs off on it nonsense?’ He is a grown man, there is no excuse for that.

          1. It could be possible that *she* has such beliefs, but if I were Rush who has a gazillion dollars in the bank, I would think I would be able to avail myself of other options.

  9. [They can’t go on] forever as wards of the state, soaking up taxpayer cash.

    No? Forever is a long time. I don’t see any reason they shouldn’t do just that for as long as they, the state, and taxpayer cash exist.

  10. “Good old Timmy Geithner. How I hate him!”


  11. Caption for the top picture: “Redjac, Redjac, Redjac!”

    1. You are a far bigger geek than you let on.

      It took me a moment to place that. Good show old boy!

      1. Karate man geek on the inside!

        TOS was something I watched a lot of as a kid. I remember all that crap pretty well. Stuff more recent, not so much.

        1. That’s why I DVR’d the entire final season of Lost, so it increased the chances of understanding what the hell is going on in the current episode. I presumed that if I didn’t have time to forget what happened the previous week, I’d be good.

          Nope. It still made no sense.

  12. “Fannie and Freddie need to be rethought entirely, if not eliminated outright. And the time to start planning for that is now. […]”

    Now who’s being naive Kay?

  13. You broke my heart, Fannie and Freddie, you broke my heart!

  14. Reform of Fannie and Freddie is just too long in coming. The danger signs began in 1999. One can only assume that these organizations are being protected by powerful people in DC.

    Fannie, Freddie, and You as the Secret Santa

    Help remove one of the roadblocks to real reform by supporting Sean Bielat for Congress to replace Congressman Frank.

  15. Here’s the thing about the privatization of Fannie and Freddie: elected representatives who advocate privatization either misunderstand economics or are trying to pull the wool over our eyes.

    Privatization essentially amounts to throwing an institution designed to resolve an externality into a market by definition incompatible with that institution. Privatization skips the formative stage where the entity chooses a market niche. It skips the intermediate stage where the entity is subjected to efficiency-inducing competition and accountability to ownership, and it goes straight into the too-big-to-fail stage. Privatization is like a toddler, who, instead of first practicing on a tricycle and training wheels, goes straight for a motorcycle.…..ation.html

  16. Geithner and Paulson – two prime candidates for up against the wall thing. If I believed in that sort of thing.

  17. I cannot take this article seriously with those images. That’s some grade school level maturity right there.

    1. Sphincter says what?

    2. Ah, a fellow Ronald Bailey fan, I see.

    3. But what about the blog post?

      1. Those words surrounding the pictures?

  18. TO THE WEAK-KNEED REPUBLICANS AND DEMOCRAT—-Wake up america!!!! This goverment is the most corrupt we have had in years. The good old boy network is very much in charge.Mr. obama and pelosi are the puppet masters.How many of their good friends benefited by the agreement ” what a farce. All of the u.sSenators voted for this. I am ashamed to say I voted for the these corupted self serving politicians.With good reason they picked an out of towner to be president.All u.s departments need an overhaul. We need to rid ourselves of the puppet masters and the dept heads that bow down to obama and pelosi.I am sick of the lip service I have been getting from these dummies over violations, their friends are getting away the goverment . Barack Hussein Obama , threatens friends and bows TO Mmslim.
    INPEACH OBAMA ,GOD OPEN YOUR EYES.///For us there are only two possiblities: either we remain american or we come under the thumb of the communist Mmslim Barack Hussein OBAMA. This latter must not occur.THE COMMANDER.REPOST THIS

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