“Perverse, relentless, untouchable” -- Fannie and Freddie

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As your Congress rushes to write a blank check for government aid to Fannie Mae and Freddie Mac, this caught my eye: Wall Street Journal columnist Paul Gigot’s withering criticism of one of the meanest gangs in Washington, ‘The Fannie Mae Gang.’

Highlights: After describing Fannie and Freddie as ‘perverse,’ ‘relentless,’ and ‘untouchable,’ Gigot writes, ‘Their unique clout derives from a combination of liberal ideology and private profit. Fannie has been able to purchase political immunity for decades by disguising its vast profit-making machine in the cloak of ‘affordable housing.’ To be more precise, Fan and Fred have been protected by an alliance of Capitol Hill and Wall Street, of Barney Frank and Angelo Mozilo.’

More: ‘... about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 (Franklin) Raines pocketed more than $20 million. Fannie’s left-wing defenders are underwriters of crony capitalism, not affordable housing.’

My two cents: There is a phrase in wide circulation in America today that accurately describes the this kind of enterprise: Privatize the profits, socialize the losses.

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Photo Credit: A.P.