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Fannie, Freddie bailout reaction

September 14, 2008|Peter Viles

Wall Street loves it and both presidential candidates support it, but the bailout of mortgage lenders Fannie Mae and Freddie Mac has plenty of critics, including a U.S. senator who said, "Simply put, it is socialism." A former advisor to presidential candidate Ron Paul called it "the biggest policy blunder of all time."

A sampling of bailout backlash:

U.S. Sen. Jim Bunning (R-Ky.): "This takeover of Fannie and Freddie is a calamity for our free market system. . . . By directly investing into the mortgage market, the Treasury Department is acting like it is a hedge fund. . . . Secretary Paulson is turning America into France of twenty years ago. Simply put, it is socialism."

Economist and former Ron Paul advisor Peter Schiff: "Despite the near euphoria that the plan has sparked on Wall Street, the move will go down in history as the biggest policy blunder of all time, and will be credited as a pivotal point in the financial collapse of the American economy. . . . The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high."

Investor and financial commentator Jim Rogers, recently appearing on CNBC Europe: "America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich . . . it's just bailing out financial institutions. . . . This is madness, this is insanity. They have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this."

Economist Nouriel Roubini, nicknamed Dr. Doom: "Like the action taken in the Bear Stearns case and other recent government interventions and bailouts of private and quasi-private financial institutions, this is a form of privatization of profits and socialization of losses; it is socialism and corporate welfare for the rich, well connected and Wall Street."

-- Peter Viles

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