Transcripts

"Commentary"- The Fannie Mae/ Freddie Mac Bailout

SUSIE GHARIB: Tonight's commentator weighs in on the government's moves to back-stop Fannie Mae and Freddie Mac. Here's Justin Fox, business and economics columnist at "Time."

JUSTIN FOX, BUSINESS & ECONOMICS COLUMNIST, TIME: I don't know about you, but as a U.S. taxpayer, I'm kind of excited about my new role as sugar daddy to our nation's two biggest mortgage lenders, Fannie Mae and Freddie Mac -- almost as thrilled as I was when I got to bankroll the takeover of Bear Stearns by JPMorgan (JPM) back in March. These bailouts make clear that I'm a very important person. In fact, I'm essential to the continued functioning of my country's financial system. So are you. We taxpayers are, as a group, far more important than Wall Street CEOs making millions of dollars a year or hedge fund managers making billions. That's because the financial sector in which these people reap their giant rewards isn't really a free-market business like, say, selling ice cream. Sure, it looks one most of the time, but every once in a while comes a crisis in which a complete financial collapse seemingly can't be averted without government intervention. With depository institutions like banks, this reality has been acknowledged since the 1930s, and we've developed a reasonable, if far from perfect, system for avoiding trouble and managing the inevitable breakdowns. But over the past three decades, more and more of the financial action has moved outside the traditional banking system. Now we're finding out that it's prone to the same risk of panic and collapse that banks are. What comes next? I'm not sure. I just know that as one of the guys who bailed all these ninnies out, I and you should get a pretty big say in the future structure and regulation of their industry, don't you think? I'm Justin Fox.