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Saving Fannie & Freddie
But it provides a certain amount of confidence to the market when the government serves as a guarantor.
Of course. The guy who owns a BBQ stand in Athens, Texas, could get credit at a lower rate if the government would guarantee it. GM would get a better rate on their borrowings if the federal government would guarantee it. I could get a better rate on my car if the government would take it. But I am against giving a blank check to Fannie and Freddie with no significant underlying reforms that ensure the taxpayers don't face a bigger problem five years from now.
Could you envision the Fannie and Freddie cases leading to regulation of investment banks as well?
I believe the purpose of the federal government ought to be to protect us from fraud. But I don't want to stifle innovation in our capital markets. If regulation is so good and regulators are so smart, why did IndyMac just go belly up. Most economic historians will tell you that the Great Depression probably would have been a garden-variety recession had not an incredible amount of regulatory and legislative blunders been made.
Could this be the beginning of a financial regulatory overhaul, like we saw in the New Deal after the depression?
Yes, if the federal government is about to be the guarantor of last resort. If we do it for [Bear Stearns], then Fannie, then Freddie, then who's next? GM? Most Americans might consider Anheuser-Busch more valuable to the country than Fannie and Freddie. So do we just jump in and prop them up? And at what point do we all of a sudden morph into some kind of European socialist economy with flat growth rates and lower standards of living? No thank you. That's not the American dream I want for my 6-year-old daughter and 4-year-old son. If this is the beginning of something, it's probably the beginning of something very bad.
© 2008
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Member Comments
Posted By: sakari @ 07/25/2008 2:03:48 PM
Comment: While I agree with a lot of what the Representative said, his comments about European socialist economies having "flat growth rates and lower standards of living" is inaccurate. Last I checked, the U.S. has a lower standard of living than most west European countries and Canada.
Posted By: aradboy @ 07/24/2008 4:36:20 PM
Comment: As an immigrant from an Eastern block country, I can sum up my disgust with what is going on with a few quotes:
???The American people will never knowingly adopt Socialism. But under the name of ???liberalism??? they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.???
-- Norman Thomas
(1884-1968) six-time U.S. Presidential candidate for the Socialist Party of America
???America is like a healthy body and its resistance is threefold: its patriotism, its morality, and its spiritual life. If we can undermine these three areas, America will collapse from within.???
-- Josef Stalin
(1879-1953) Communist leader of the USSR
???If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered.???
-- Thomas Jefferson (1743-1826)
Do you really believe that what is even being considered is what is truly best for our nation and our children? I don't, and, it saddens me to say that a lot of people don't either... Ironically, health care does achieve the status of a "socialist" idea, but not privatizing profit and socializing losses.... Here are two more quotes about politics and politcians, I guess...
In order to become the master, the politician poses as the servant.
Charles De Gaulle, 1969
The rich require an abundant supply of the poor.
Voltaire
Posted By: Cloudosmoke @ 07/23/2008 12:56:46 PM
Comment: Yep, should have let them go. Homeowners would survive about as much as the money they put into saving these corps. Matter of fact, they need to stop throwing up houses left and right and instead invest in restoring these old gutted rat holes in old neighborhoods. If you invest in old neighborhoods instead of gutting wooded areas that we need to preserve then the Mack Daddy corps wouldn't be needed.