Daniel W. Drezner

Open Fannie Mae/Freddie Mac thread

Comment away on the government takeover of Fannie Mae and Freddie Mac.  If you think I have something substantive to say about the economics of it, you’d be wrong — I’m still puzzling over what the government will actually do.  Instead, I will simply note some rather odd political effects: Here’s a fun counterfactual:  step back ...

Comment away on the government takeover of Fannie Mae and Freddie Mac.  If you think I have something substantive to say about the economics of it, you’d be wrong — I’m still puzzling over what the government will actually do.  Instead, I will simply note some rather odd political effects:

  1. Here’s a fun counterfactual:  step back for a minute and think about what would be happening right now if John Snow was still the Treasury Secretary instead of Henry Paulson.  That’s a scary f$#&ing thought, isn’t it?  For someone who ostensibly accepted the job during an administration’s lame duck years, Paulson’s been rather… vital, no?  If you were a conspiracy theorist — which I’m not — you’d almost have to wonder if Bush officials, when they approached Paulson, let him know that a financial storm was a brewin’. 
  2. The effect on the presidential campaign seems obvious to me — isn’t it going to be very, very hard for the GOP to bash Obama as a big government liberal when a Republican administration takes over two of the largest financial institutions in the country with the support of the Republican candidate for president?  It’s not like this is a completely new phenomenon, but still. 

Comment away.  Readers are also encouraged to provide a complete list of U.S. companies that are “too big to fail” — i.e., so vital to the economy that the U.S. government will bail them out regardless of what happens.  UPDATE:  Skimming at what’s been reported, I am cheered by the fact that one of the goals of the takeover is to make sure, long term, that Fannie Mae and Freddie Mac will not be “too big to fail” in the future. 

Daniel W. Drezner is a professor of international politics at Tufts University’s Fletcher School. He blogged regularly for Foreign Policy from 2009 to 2014. Twitter: @dandrezner

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