The Cato Institute‘s Gerry O’Driscoll wisely warns against bailing out Fannie Mae and Freddie Mac. Here are some choice paragraphs:
Absent from [Treasury Secretary Henry] Paulson’s plan is any protection for taxpayers. They’ll
fund the downside if losses mount at the two mortgage giants. But if
Fannie and Freddie recover, stockholders and management gain. Call it
"casino capitalism" – taxpayers bankrolling management high rollers.
The plan doesn’t ask stockholders or management to suffer for their
financial indiscretions. The players who put their companies in
jeopardy get to stay in charge – Paulson says he isn’t looking for
"scapegoats." Someone should remind him that capitalism without failure
is like religion without sin.