Monday, July 14, 2008

Another Government Bail Out Of The Investor Class

Fannie Mae and Freddie Mac gets some taxpayer love:
Alarmed by the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.
I tend to agree with Atrios on this:
Actually, Fannie and Freddie can be allowed to fail. Their shareholders can eat shit, and they can be reconstituted as a wholesale federal entities. There are zero reasons that I can think of that we should have shareholder owned entities which "probably but not necessarily" are going to get a government bailout every time they need it.

Both short and long term we might think that having such creatures exist to be mortgage backstops is a good idea. I probably agree with that. But there is no reason for them to be publicly traded companies.

Anytime the idea comes up to raise the taxes on capital gains, the protectors of the investment class, Republicans, run around shrieking about taking money from risk takers and giving it to lay-abouts.

Clearly, our economic system is also part of our infrastructure and just as important as our highways and military to provide the well-being of this country. If the investor class is unwilling to provide adequate funding for the upkeep and regulation of this economic infrastructure, why should the rest of us have to bail them out, while the crooked big-wigs walk right out the front door with millions of dollars in bonuses?

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