Fannie Mae and Freddie Mac--Government Corruption Personified

Fannie Mae and Freddie Mac are perfect examples of how "Government Run Business's" work, I mean fail.

These companies were setup as "private business's" by government with good intentions. They were designed to advance home ownership by providing loans to lower income buyers.

With government perceived backing they were able to offer lower rates than commercial competitors to people that were not technically qualified. With incompetent management made up of cronies of the controlling government organizations and creative political donations to the members who have oversight, they were allowed to continue with unchecked corrupt and expanded policies. In 2004, the government recognized both organizations were in trouble and the government held hearings on corrective measures. Oversight was increased, but due to partisanship and corruption it was limited and ineffective, allowing them to dig the hole deeper.

Now, since they have grown too big, but still corrupt and entwined with the policy makers, they are "too big to fail." Hence the solution is to back their incompetence by expanding their role, rewarding their mismanagement, and spreading the cost to the taxpayers. Similar to previous government corrective action.

Government Run Businesses are controlled by Politics, not good business practices. "Government Run Business" can never fail. Consequently, The Government solution is to make it bigger and badder.

This is how you Socialize a Nation.

Fannie and Freddie's Enablers from the Wall Street Journal provides more insight as to some of those on the Government side that are responsible.

Fannie Mae, Freddie Mac: Boondoggle..
by Dan Gainor provide more detail. Added August 6, 2008.