Quote of the Day:
"The GSE structure serves to privatize profits and socialize losses."
-- Arnold Kling, The Cato Institute
Subject: Kill Fannie-stein and Freddie-stein
Politicians and bureaucrats have a good sense of timing for announcing bad financial news. The ideal time to deliver bad news is either on a weekend, or when the media is obsessing about other things, like hurricanes, political conventions, and vice presidential choices. So it was this last weekend when federal officials announced their intention to nationalize Fannie Mae and Freddie Mac.
No one knows what the cost will be yet. It could be small. It could be large. It could be astronomical. But whatever the price tag, YOU will pay the bill. The good news is that the news isn't all bad. Both companies have been stripped of their lobbying arms, the stockholders of both have been wiped out, and the current plan is to start selling off the portfolios of each company. Now here's the bad news . . .
The asset sell-off isn't scheduled to begin until 2010. That's a long time. The policy could change by the time 2010 arrives, and there are plenty of reasons why it would change. Fannie Mae and Freddie Mac have always been good deals for the politicians. These GSEs (government sponsored enterprises) have always been good places for government officials to land after leaving federal employment. And GSEs give politicians plenty of opportunities to reward favors.
We need to demand that Congress set these "too big to fail" monsters, Fannie-stein and Freddie-stein, on the road to complete liquidation. We have a new campaign that you can use for this purpose. This new campaign will be used to oppose new spending bills as they come into view. The message to Congress asks for overall spending cuts. You can use your personal comments to ask for specific cuts. In this case . . .
Tell Congress that you never again want to pay to rescue a GSE -- government sponsored enterprise. Ask for legislation that will liquidate Fannie and Freddie completely. You can send a message to your representatives in Congress with our easy-to-use Educate the Powerful System.
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