The Fannie and Freddie Fiasco

Sloppy thinkers often confuse support for free-market capitalism with "doing what big business wants." In fact, the two are often entirely different, as large well-connected companies often thrive through the very fact of government regulation, using the government to step on competitors and create rent-seeking opportunities, while in turn rewarding politicians out of their profits with electoral support. The Fannie Mae / Freddie Mac fiasco is turning out to be a prime example of such crony capitalism in operation. These two quasi-private companies enjoyed many special perks (from huge tax breaks to an implicit government guarantee), enriching both themselves and a circle of Wall Street banks while protecting themselves from criticism by waving the "we're helping the little guy" banner. Leftish Congressmen ranged from... [read full story]