Getting A Grip On The Housing And Mortgage Crises... | The EUREKONOMICS™ Money for Life Blog

Getting A Grip On The Housing And Mortgage Crises…

September 8, 2008 | Author dragonfly

The seemingly never-ending housing and mortgage crises effect each of us every day whether we feel it or not. The fact that the federal government is taking them over in order to rein in their excesses demonstrates that the take-over of Fannie Mae and Freddie Mac represents something much more than just a government bailout.

Fannie Mae and Freddie Mac are quasi-governmental agencies that were virtually immune to the checks and balances of free enterprise. Their failure is the failure of government intervention in the free market that established these entities in the first place, and allowed them access to the capital markets while concurrently giving them free rein to gain subsidy and support from the pork barrel congress.

This is a watershed moment in American economics and perhaps American politics; a monent when the do-nothing Congress may recognize that federal government’s finger in the free enterprise pie creates many more problems than it solves…big problems.

Dr Agon Fly

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In Rescue to Stabilize Lending,

U.S. Takes Over Mortgage Finance Titans

By STEPHEN LABATON and EDMUND L. ANDREWS

Published: September 7, 2008

WASHINGTON — The Bush administration seized control of the nation’s two largest mortgage finance companies on Sunday, seeking to shrink drastically their outsize influence on Wall Street and on Capitol Hill while at the same time counting on them to pull the nation out of its worst housing crisis in decades.

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The plan represents a cease-fire in a decades-long ideological battle over the proper role of the companies. Free-market conservatives see the companies as extensions of “big government,” while Democrats have protected them as the main vehicle to promote affordable housing for middle- and lower-income people.

http://www.nytimes.com/2008/09/08/business/08fannie.html?_r=1&hp&oref=slogin