Fannie & Freddie Collapse Predicted a Decade Ago

My most loyal reader e-mailed me a link to an old New York Times article from September 30, 1999 concerning Clinton Administration policies with respect to Fannie Mae and Freddie Mac. The headline read, "Fannie Eases Credit Aid to Mortgage Lending."

Here's the rub:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.

If I were Pete Seeger I might very well ask, "When will they ever learn?"