Tuesday, July 22, 2008

Fannie and Freddie

Get ready to open your wallets, to the tune of $25 billion to potentially “bail out” Fannie Mae and Freddie Mac.

It may or may not be needed – there’s still quite a bit of concern about the capitalization of those two “Government Sponsored Enterprises” (GSEs).

The entire notion of the “GSE” is an invitation to risk taking, rent seeking, and corruption. At the end of the day, everyone knows that the taxpayers will be on the hook for losses. Congress provides minimal oversight, and gets to staff the companies with political cronies like Obama’s former Veep-Vetter James Johnson and current advisor Franklin Raines.