2 thoughts on “The money shot”

  1. This certainly says it all. Noone likes to admit any wrongdoing. The sad thing is this isn’t just a small mistake but a very costly one. I wonder what would have happened if they addressed this issue when it first came up, would we be in the situation we are in now…One will never know.

  2. The very existence of GSEs like Fannie and Freddie severely distort the market. It isn’t a free market when the government forms a company and implicitly (and later explicitly) guarantees those companies debts. For one thing, the government is writing the rules under which the markets must operate. For another, the government owns the printing presses for the money. So the regular risk/reward calculation that markets make was skewed. Private firms were forced to compete with companies they couldn’t ever hope to beat. That’s the root cause.

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