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Fannie, Freddie need support, not bailout
By Franklin D. Raines -
Sunday, July 20, 2008
Story appeared in FORUM section, Page E5
"Just Tuesday, Fed Chairman Ben Bernanke outlined the problems facing our economy. It is time to make a choice: Continue the policy approach of trying to kill off the companies and reap the economic carnage that will inevitably produce, or make a forthright statement that these companies are necessary instruments of national policy.
Paulson has tried to move the administration and the Fed back from the brink. But too much ambiguity remains.
President Bush should stand with Paulson, Bernanke, Fannie and Freddie's regulator, and with the chairmen of the relevant House and Senate committees, and together they should declare Fannie's and Freddie's clear roles in our markets. They should codify this role in legislation that will bind future administrations. The sooner this happens, the better."
About the writer:
Franklin D. Raines was chairman and chief executive of Fannie Mae from 1999 to 2004 and served as director of the Office of Management and Budget in the Clinton administration. He receives a pension and deferred compensation from Fannie Mae and owns stock in the company. This article originally appeared in the Washington Post.
Veteran journalist William Grieder thinks that we're not witnessing a temporary financial hiccup, but rather at the dawn on "Wall Street's great deflation." and it is far from over.The crash of IndyMac is just the beginning. More banks will fail, so will many more debtors. The crisis has the potential to transform American politics because, first it destroys a generation of ideological bromides about free markets. The root of the problem is the same as it has been for centuries: credit, which leads to debt that spirals into ever greater debt. Then those who are lenders gamble that they can make even more money by devising new and more lucrative ways for people to go more deeply into debt, while the people themselves gamble on what they consider a sure thing, just what they need to pay off their debts, or set themselves up for retirement, or finance their lifestyles, etc. It said in Psalm 15:5a," He that putteth not out his money to usury, nor taketh reward against the innocent."
Ted Rudow III,MA