Monday, July 14, 2008

The salvation of Freddie and Fannie

What else do we need to do at this point to bolster our fledgling economy. This morning's move by the Treasury and the Fed to save the two large mortgage giants is just another tiny step to fixing what's wrong with the system right now. Granted, stricter lending requirements and more oversight into the secondary credit markets will help in the long run, but let's face it, rules were meant to be bent and broken.

Regardless of what is done to fix the problem now, it will only breed a new level of creativity from shyster brokers and credit lenders. We have to correct the problem, not the symptom. If I'm Dan Mudd from Fannie Mae and this is how my ineptitude and complete ignorance of a problem is rewarded, why am I going to change? If I keep printing money for myself and the other executives while getting a handout from the government to prop my failing business model back up on wobbly legs; why bother doing it differently?

Maybe it's time to send a message to this whole industry. There is no safety net or security blanket. You have to make your business work or it will fail. Along with that, many people will go broke and have misery thrust upon their lives. When faced with adversity, it's either sink or swim and now is the time for some adversity in the American public. A panacea bailout is not the solution.

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