Congress over the weekend sent President Bush its most sweeping response yet to the housing crisis. President Bush is expected to sign the bill, which aims to help homeowners avoid foreclosure and shore up mortgage giants Fannie Mae and Freddie Mac with federal loans and investment. (Los Angeles Times)
What the commentators said
If you care about the health of the economy, said Lawrence Summers in The Washington Post, you should be happy that Congress has passed the Treasury Department’s rescue plan for Fannie Mae and Freddie Mac. “While there is room for argument about details, the risks to the financial system were too great to allow delay.”
“Fannie and Freddie had to be rescued,” said Paul Krugman in The New York Times. And the bill’s other main component—a loan program for people heading toward foreclosure—will help some “hard-pressed families.” But this is just a temporary fix—the “sheer scale” of the financial system's problems demands real reform.
The next step is breaking up Fannie and Freddie, said Heritage Foundation Senior Fellow J.D. Foster in the Salt Lake Tribune. Congress created these government-backed but privately owned “financial goliaths” to make more homes affordable to more people, but they are too big, too poorly capitalized, and too cozy with politicians to be run well. Once cut down to proper size, they’ll pose less risk to themselves, and to the taxpayers who would pay for a bailout.
Boy, talk about “rhetorical jujitsu,” said John McCarron in the Chicago Tribune. Free enterprise think tanks point fingers at “Big Government, and especially at 'socialist' enterprises such as Fannie Mae,” for pushing the economy into a ditch. The real culprit was “a craven pattern of private-sector greed and exploitation that reads like the story line of a Marxist comic book.”