by Mark Thoma, University of Oregon (Department of Economics)

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Making Fannie and Freddie Pay for Their Free Lunch

Posted on July 24, 2008

Joseph Stiglitz says just say no to free lunches:Fannie s and Freddie s free lunch, by Joseph Stiglitz, Commentary, Financial Times: ...The US government is about to embark on ... a partnership, in which the private sector takes the profits and the public sector bears the risk. The proposed bail-out of Fannie Mae and Freddie Mac entails the socialisation of risk with all the long-term adverse implications for moral hazard from an administration supposedly committed to free-market principles. Defenders of the bail-out argue that these institutions are too big to be allowed to fail. ...

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housing bubble