Friday, October 3, 2008

Government Failure

This article in the Wall Street Journal gives us a very detailed account of government failure. A few examples of what used to be said in Congress before the crisis:

If it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?

I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke.

Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae. ... Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals.

I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.

I know the press, particularly, keeps saying this is another Enron, which it clearly is not. Fannie Mae has taken its lumps. Fannie Mae is paying a very large fine. Fannie Mae is under a very, very strong microscope, which it needs to be. ... So let's not do nothing, and at the same time, let's not overreact.

I think a lot of people are being opportunistic, ... throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie," when that is not what's called for as a result of what's happened here.

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