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Fannie, Freddie Woes Predicted Long Ago

1 min readBy: William Ahern

Government finance scholar Allen Schick, long of Brookings and the University of Maryland, is the employee of the day at the Department of IToldYouSo.

See page 3 of this old scanned-in Tax Foundation newsletter to see the prescient, plain-English piece he wrote in 1989 about the alarming debt of Fannie Mae, Freddie Mac and other so-called government-sponsored enterprises.

It’ll be no surprise to Prof. Schick to be reading almost 20 years later today’s articles about the debt-related woes of those unsound institutions:

Bloomberg: “Fannie, Freddie `Insolvent’ After Losses, Poole Says”

MarketWatch: “Fannie, Freddie shares slump for third day; Freddie Mac falls 23% as capital fears persist”

BusinessWeek: “Fannie, Freddie Resume Their Free Fall”

We can only hope that Congress and the Administration ignore the bailout pleas of the special-interest crowd, exemplified as usual by the Realtors’ chief economist Lawrence Yun: “Just given the size of the two companies, surely the government would not stand aside.”