Let Fannie Mae and Freddie Mac collapse

Well we see troubles in the credit market continuing. Now some bank based in Pasadena called IndyMac Bancorp, with about $32 billion in assets under management, has collapsed and been taken over by the Feds. Like I’ve said, this mess will go on for a while. Fannie Mae and Freddie Mac, a couple of mortgage market investment firms created by the federal government, appear to be near collapse themselves. Now what used to be considered a fairly remote possibility–a bailout by the federal government–becomes more and more likely by the day. But why should these exchange-traded, supposedly private vehicles be given a cushion by taxpayers? They shouldn’t. The Feds should take over Fannie and Freddie, if necessary–but after they are allowed to fail, just like in the case of IndyMac Bancorp. But would that create chaos in the mortgage market? Sure, but so what. If you don’t like it, you must be a communist or something. This is the “creative destruction” of the marketplace, people. Now, if only there were a country with billions of dollars worth of housing underneath their sands.

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