Andrew Leonard posts about the politics of Freddie Mac and Fannie Mae:
The critical difference between right and left points of view on this issue is that the right thinks the government shouldn’t be involved at all in the housing market, while the left believes that Fannie Mae — which was originally created during the Great Depression as a fully public agency entrusted with propping up the housing market — never should have been transformed into a semi-public, semi-private entity in the first place. This gets to the heart of a distinction made by Paul Krugman in his blog today between “nationalization” and “deprivatization.” Headlines declaring that Fannie and Freddie are being “nationalized” are running rampant through the blogosphere, summoning up visions of banana republics kicking out Yankee oil companies in the name of the revolution! But what’s really happening is that the bastard halfway privatization of Fannie Mae has now been revoked.
And here’s why Fannie Mae and Freddie Mac weren’t really the problem in the first place:
We shouldn’t be shocked at all that Wall Street went completely overboard in its love affair with housing market manipulation. That’s what happens when a market is left to its own devices, and government eschews its oversight responsibility. That’s what always happens. And when the mess gets big enough, government has to step in and clean everything up, which means that even if the feds had kept their hands totally clean — if there had been no Fannie Mae and Freddie Mac muddying the waters — some kind of public entity would have had to be created as the government vehicle for correcting market failure.