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Shields, Brooks Assess Struggles in the Economy, Campaign News

With continued financial troubles in the headlines, the presidential hopefuls have made their plans to improve the economy central to their case to voters. Mark Shields and David Brooks discuss the Fannie Mae, Freddie Mac panic and campaign trail developments.

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  • JIM LEHRER:

    And to the analysis of Shields and Brooks, syndicated columnist Mark Shields, New York Times columnist David Brooks.

    Fannie Mae and Freddie Mac, Mark, you're an expert on that. How serious is this?

  • MARK SHIELDS, Syndicated Columnist:

    Big Mac is my expertise.

    It's serious, Jim. I mean, it sent tremors, quite frankly, through both Washington and Wall Street, the possibility that it could fail. And I think the discussion with Jeff and…

  • JIM LEHRER:

    They at least explained it. A lot of people don't understand what it's about.

  • MARK SHIELDS:

    Explained it very well. And I think they talked about it's really too big to let fail, seems to be the emerging consensus.

    But there was a picture in David's paper, the New York Times, of the secretary of the Treasury, Hank Paulson, testifying before the Congress on this. And he had his head in his hands, which kind of sums up the whole thing.

    I think it's — the alternative, the options that were laid out in the discussion in reality are not very appetizing politically. If the government takes over the obligation, takes over Fannie Mae, that almost doubles the national debt, all right? I mean, it's $5.2 trillion, I think, is what their outstanding debt is, Fannie Mae and Freddie. If that would be the case in a political — it would be political disaster in a presidential year.

  • JIM LEHRER:

    Do you agree with that, political disaster?

  • DAVID BROOKS, Columnist, New York Times:

    It would be tough. I mean, over the past 10, 20 years, there have been op-ed piece after op-ed piece, which I confess I have not always read, saying we should privatize Fannie Mae and Freddie Mac because why should we have these quasi-independent agencies where they get the money and the implicit assumption is the government gets to back them up if they lose the money? And so why do we have these things?

  • JIM LEHRER:

    They don't make any money ever.

  • DAVID BROOKS:

    Right, but they get to take risk, and we're sort of — we're left holding the bags, we as taxpayers. But now we're in the situation where we may be left with this.

    I think the more — I don't know. I don't know — it's a crisis, but I do think you don't have to be a genius to see what's going on here, and that this is the underlying picture crossing this, Bear Stearns, and really the whole political year is jitters.

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