“If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.
“It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.
“Phasing out Fannie Mae and Freddie Mac would make much more sense than letting politicians play politics with them again, with the risk and expense being again loaded onto the taxpayers.”
Thomas Sowell, “Bailout Politics,” September 30, 2008
1 reply on “Thomas Sowell”
Sowell, as usual, has cut to the essence of the problem. He is one of the most insightful of the economists working in the United States today.