28 Quotes: Fannie & Freddie’s anomalous legal status
October 7th, 2008
28 days are left until the election and with personal attacks aplenty, little is helping voters understand how we got into the current financial mess and how we are going to get out of it. Right now I am compiling as much information as possible for a section exploring the biggest issue facing this nation in 2008 and every day, for the next 28 days, I will leave you with a quote in the blog on the topic to help explain this mess.
“The biggest advantage of Fannie Mae’s and Freddie Mac’s anomalous legal status arises because financial markets treat their obligations as if those obligations are backed by the federal government - even though the federal government explicitely does not do so… One critic, Richard Carnell (2004), a former Assistant Secretary of the Treasury, has suggested that the two companies’ growth is at least partially a consequence of a “double game” that they play: ”[They] tell Congress and the news media, ‘Don’t worry, the government is not on the hook’ - and then turn around and tell Wall Street, ‘Don’t worry, the government really is on the hook.’”
W. Scott Frame and Lawrence J. White The Journal of Economic Perspectives, Vol. 19, No. 2 (Spring, 2005), pp. 159-184 Published by: American Economic Association
Sphere: Related ContentPosted in 28 Quotes for 2008 |
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