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Fannie and Freddie fleece the taxpayers

Independent Institute
by William F. Shughart II

08/18/08

Readers of a certain age might remember the old newspaper cartoon of a man so down on his luck that he resorts to wearing an empty barrel held in place by suspenders. If Fannie Mae and Freddie Mac continue on their present course, barrels may again become fashionable for US taxpayers. Criticized last week as ‘fatally flawed’ by Alan Greenspan, the two so-called mortgage giants are at the center of the current financial crisis. Owned by private investors but chartered by Congress for the purpose of supplying liquidity to mortgage lenders, thereby putting home ownership within the reach of more Americans, Fannie and Freddie aggressively participated in the booming housing market of the early 21st century. By the end of the third quarter of 2007, the two were guaranteeing — or had purchased outright — roughly half of the nation’s home mortgages, accumulating in the process $5.2 trillion worth of debt, nearly $4 trillion more than on their books in 2003. The roof then fell in...

http://www.independent.org/newsroom/article.asp?id=2298


Informant: Thomas L. Knapp



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