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So Fannie Mae and Freddie Mac were officially bailed out yesterday by the US Treasury. Normally, I'd rail against how bad this is for a functioning market, that banks need to fail, etc. Today I would like instead to comment on something even stupider (and surprise, surprise, it is possible). Congressmen (I heard Chris Dodd on the radio this morning and a few last night on TV) are lining up to say, "Yes, we gave Secretary Paulson the authorization to take over Fannie and Freddie, but he assured us he wouldn't." To use Paulson's own bazooka metaphor, that is like looking at a pile of burning rubble and saying, "Well, sure I gave him the bazooka, but he told me he wouldn't use it." It's not rocket science. If you don't want the executive branch to USE an authority, don't GIVE them the authority! |
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