Obama Gets One Right
"Long term, what we have to do is go ahead and make a decision," Mr. Obama said last week in Davenport, Iowa, in response to a question. "If these are public entities, then they have to get out of the profit-making business, and if they are private entities, then we don't bail them out." Sounds like former Federal Reserve Chairman Paul Volcker and former Treasury Secretary Larry Summers have been talking to the Illinois Senator.
Mr. Obama added a note of populism, saying he had "no sympathy" for Fannie and Freddie CEOs, and that "investors who had made a killing" shouldn't be bailed out. Maybe he can whisper that to current Treasury chief Hank Paulson, who keeps saying he wants to preserve the companies in their "current form," despite the manifest failures of that form.
Will he have the guts to stand up to panderers like Schumer, who will want to replace this broken Fannie/Freddie system with an even bigger, even more expensive and pointless, taxpayer-funded boondoggle that will operate at the whim of whichever party holds the looped end of the leash?
The government needs to snatch these and run them only long enough to chop them into bits and auction those bits off to the public markets. The Europeans don't need GSEs like these, do they?
Maybe what we really need in the U.S. is an end to the ridiculous fetishism of home ownership, something I've never understood when the vast majority of the homes here are nothing but sticks and drywall.