Wednesday, August 20, 2008

Its Time To Discuss How Best To Liquidate Fannie and Freddie

-Lawrence H. White gets it:

The more talk I hear about a bailout being inevitable, the more I am convinced that liquidating Fannie and Freddie and starting afresh with explicitly unguaranteed institutions is the only credible way to reach the goal of an undistorted financial market populated by institutions that do not threaten to unload their losses on taxpayers. How best to liquidate Freddie or Fannie if they become near-insolvent should be the topic now under discussion -- not how best to bail them out.

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