The NYT reports that the Bush administration is making plans for a rescue operation to keep Fannie Mae and Freddie Mac operating in the event they effectively become insolvent. While this piece is focused on the possible outlines of the rescue plan, it would be appropriate to analyze the failure of regulators and analysts to see the warning signs in years past. Hopefully this will be the topic of future articles.
[On a trivia quest, the first written comment on the topic that I could find is from the end of September, 2002:
"If housing prices fall back in line with the overall rate price level, as they have always done in the past, it will eliminate more than $2 trillion in paper wealth and considerably worsen the recession. The collapse of the housing bubble will also jeopardize the survival of Fannie Mae and Freddie Mac and numerous other financial institutions."]
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