bailout

So there are a lot of a’hooting and a’hollering over the “bailout” of Fannie Mae and Freddie Mac.  Both sides of the aisle disagreed with it but the moderate (and mostly left) felt that it was necessary to stabilize the market.  In the house hearing committee last week the mostly GOP side advocated that such explicits commitment to the the failing banks will endanger the public and cost billions if not trillions of dollars.  Personally I’m not a big fan of government intervention and over regulation but in this case i would i to say that backing up fannie and freddie is (as mentioned) necessary.  some points to consider:

1) the reason for fannie and freddie being in this mess in the first place is that they were extremely under-regulated.  Instead of having the proper capital needed to maintain a secured buffer in case turmoils in the market, they spent it on lobbyist to persuade politicians that they didnt need that buffer.

2)  the bill would require an independent regulator to oversee both fannie and freddie.

3)  400 million are going to communities to buy up foreclosed homes and help stabilize local markets.

4)  just a couple months ago with bear stearns was going under, the GOP noted that this company must not fail and support (funded) JP Morgan buy out if them.  They argued that if an entity so large and global failed, the world market will collapse.  Yet with fannie and freddie, whos wroth is 4000x that of bear, they turn a blind eye to that very same fact.

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