(08-07-2018, 08:06 AM)mikesez Wrote:

(08-07-2018, 03:37 AM)jj82284 Wrote: 1.) You're right.  More often than not the flawed policies designed to "help minorities" often either fail or help more white Americans.  Just look at the last half century.  

2.) Fannie Mae and Freddie mac were the driving engine of the mortgage crisis selling both mbs and liability swaps.  "Looked the other way" is another statement of economic ignorance.  Fannie Mae and Freddie Mac (and the federal reserve) set the basic standards of what was perceived to be a conforming traditional loan and purchased some 50% + of all the paper that was written.  Prices communicate information about risk and perceived risk.  Frank Raines testified before Congress that he was so confident in the paper they were writing that he could envision keeping less than 1% cash on hand to cover potential losses.  It's no wonder derivatives were so dramatically under priced and under covered.  Central pricing is inherently inefficient and immune to market realities.  Central pricing of risk for social goals is economic SUICIDE.  

3.) You're right. He was smart enough to let other people say it for jim.  Go back and watch congressional hearings when Bush wanted to more tightly regulate Fannie and Freddie.

"Central pricing of risk for social goals" describes both FDIC and unemployment insurance, both of which are solvent.  It also describes Social Security and Medicare, which are less solvent but still unlikely to collapse in flames the way Frannie and Freddie did.
It is risky but when coupled with the right regulations and social norms it can work.
Fannie and Freddie were allowed to get way too big compared to their original purpose, and no one in government stopped that in the short term because what they were doing was very lucrative for everyone.

The had the government not bailed out the financial institutions then we would gotten a glimpse as to how solvent fdic was.  

As for "less solvent" we're facing an imminent sovereign debt crisis with North of 150 trillion dollars in unfunded liabilities.  That's pretty much the dirty part of the toilet paper.  

"If only we got the mix right if only the right people"  

Your comment illustrates that central pricing of risk fails because there is always a shortage of political will to abandon good intentions no matter how stark the fiscal reality.

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