Fannie About To Fall on It?
[Thanks to Pyzam.com for the image.]
Both Fannie Mae and Freddie Mac are way over their head in potential debt at this point. The legislators have seen fit to burden them with saving the country from the bursting mortgage bubble (actually a monetary bubble in my opinion).
The problem is that we, the taxpayers, will be called upon to cushion that fall, because the only outcome of a falling Fannie would be for our government to take her over and foot us with the bill.
See this great graphic at the New York Times, linked through this informative article by Charles Duhigg, linked through this great blog post at Peter Viles's LA Land blog at the LA Times.
And like dominoes, Freddie Mac, Sallie Mae (student loans), and the Federal Housing Administration are not far behind; then who knows, maybe even the FDIC (Federal Deposit Insurance Corporation) and the PBGC (Pension Benefit Guarantee Corporation)--but whoa, let's not panic yet.
As econonomists say, it is always easier to spend money when it's not your own. Legislators are not immune to this economic rule.