Government, markets and regulation

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Just Another Gov't Program Gone Bad

Fannie Mae was created in the
Depression to create liquidity in
the mortgage market. Lequidity
had been wiped out by the stock
market collapse and bank runs.

As with all government
programs, it just grew and grew
and never went away. It gained a
monopoly on mortgage backed
bonds. Freddie Mac was then
created to provide competition.
You ended up with two
government entities "competing"
with themselves.

To add fuel to the fire,
management was given over to
political appointees rather than
professional managers, again
typical of government
"businesses'. That led to the
lobbying and cozying up with so-
called "rights" groups that
allowed them to skirt lending
guidelines buy buying bundled
mortgage bonds from the
bundlers of sub-prime loans. If
not for that, the 2 companies
would not have a problem.

This is just another example of
government screwing things up.
In fact, it's near impossible to
name even one thing that the
government does both well and
efficiently. In every single case
some program that sounds good
at the time ends up being a total
financial boondoggle.

Government schools (aka public
schools) have descended into the
abyss of educational failure at
ludicrous cost. One cannot
imagine how bad a government
run health system would be.
Then again, if you take the
government's track record in
every other endeavor, it is easy to
imagine.

Posted by: j.m.galvin   Posted on: 07/24/08 You are currently: a Guest | Members login | Terms of Use

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