Response To Fannie/Freddie Article

This is a response to D-Money's comments on my last article Government Panic is Killing Us and Our Banks. I was just going to reply to him in the comments section but it ran a little long, so here's just to you!

D Money- I see what you're saying but let's also keep in mind that the current housing situation is also the result of the Federal government incentivizing banks in the 1990s and early 2000s to give mortgages to people with no proof of income qualification. And as a result there were many people who didn't qualify and chose to default on their mortgages, with the banks left holding the bag. To be fair though, no one forced banks into this situation.

Fannie Mae and Freddie Mac however were pretty much created to give out these kinds of loans. The difference is that we all have to sponsor those burgeoning bureaucratic GSEs with our tax dollars.

As to your comments about patterns of regulation... I think it suffices to say that we as a nation have been trending toward much more regulation and government interference than ever before. Prior to the Civil War, citizens pretty much only interacted with the government through the post office. The markets get better and they get worse, making natural corrections all the time. Bank takeovers, among others intrusions, are like boulders placed in front of falling water. They won't hold it back, but they'll make the drop steeper.

Thanks for your comments, I look forward to more in the future.

What's your opinion? I'd love to hear it.