FAN & FRED

A WSJ EDITORIAL take note of politics with respect to Fannie Mae and Fredie Mac:

"The MBS portfolios have long been both the chief source of the systemic risk posed by the two mortgage giants and of the profits that so handsomely enriched shareholders and officers alike for decades. Without the extreme leverage inherent in those portfolios -- which the companies borrowed heavily, at taxpayer-subsidized rates, to accumulate -- their federal takeover might never have become necessary.

For years, Mr. Frank and other friends of Fan and Fred opposed not only bills written to limit the size of their portfolios, but any bill that in their view gave an independent regulator too much discretion to order a reduction. This was true of the reform that his House committee passed last year. Only when the White House caved to Mr. Frank and dropped its earlier insistence that a reform bill rein in the portfolios did Mr. Frank move his bill."

I'm not trying to draw attention to the politician under the WSJ's spotlight here. I suppose if the staunch support didn't come from this politician it would have come from another politician. The point I want to draw attention to is that the failures of FAN and FRED have much to do with the failures of government. Check out the entire editorial and note the idea that "taxpayer-subsidized rates" are important parts of the story of these failures.