Fannie and Freddie Stagger On as Troubled Wards of the State - WSJ.com

Post 2 on Responsibility: Fannie and Freddie Stagger On as Troubled Wards of the State - WSJ.com

Sorry, but the bigger issue should be 'clearing prices' for housing.

Why not let the market determine who is going to own all this real estate that needs to be in stronger hands?

Maybe the housing will have to be sold in bulk, at fire sale prices, to private equity funds? No one knows.

But, as long as the government insists on mispricing housing and all sorts of other parts of the economy, the distortions will inhibit the economy from righting itself.

As for regulation - ask yourself who bought houses for prices and with loans they couldn't afford?

And, why is it that there wasn't any competition with rating agencies?

And, why is it that Basel II let banks take triple A paper without understanding what they were taking on as an asset? (Isn't this a perfect example of one regulatory fix (i.e. Basel II) creating a worse problem down the road by removing the bank's own prudent thinking for process-oriented solutions?

And, why not spend more time thinking about how the Congress pushed for Fannie and Freddie to make loans which were imprudent at the time - all of which pushed the competitive envelope? Something which, we are clearly seeing again now!