lavalyn

Frannie Bailout: Private Profit, Socialized Risk

SilverLeaf: the complaint about "private profit, socialized risk" is simply that of moral hazard and double standards. If you or I were to open a business and lose our shirts the way the GSEs have, the banks would stop lending, and we'd probably lose everything... easily beyond shareholder capital.

This bailout is the taxpayer stepping in to cover for mistakes made, which is already dubious... and that's before upper management taking in millions in bonuses, shareholders getting dividends... and them then not giving back. In the interest of "limited liability." The GSEs have been riding the implicit (and now apparently explicit) government backing, while not giving the taxpayer/government any return for it.

Your argument that the public benefitted from the GSEs is irrelevant. Wal-Mart benefits the public, by being a retail store and generating jobs (low-paying, sure, but they likely as a result hire more minorities).