Under a 1992 law, if either of these two mortgage giants is seen to be severely undercapitalized, it may be placed into government conservatorship. But the plan now being pursued is to bail out these private corporations by increasing their capital base with taxpayer money and their profit margins with greater access to Federal Reserve loans. The result will be to privatize profits to their management and shareholders while socializing risk to the taxpayers. We the people will foot the bill. If the people are going to bear the risk, we should reap the benefits. Either these two mega-corporations should take their licks in the market like any other private corporation, or they should be nationalized, delivering not just their debts but their assets to the taxpayers. Not just Fannie Mae and Freddie Mac but the Federal Reserve itself should be made truly federal entities, as the voters have been led to believe and their names imply. Remove the myth that these Wall Street-controlled entities act by and for the people rather than being run for private gain, and we will soon see the outrage Mr. Grant says is curiously missing.
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