Apparently, Fannie and Freddie are the new Batman and Robin.
At least they seemed more like heroes than villains in a July 6 ABC News story about the troubled housing market. Reporter Rich Blake gave the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac credit for "propping up" the flailing housing sector:
"As perplexing and disturbing as this economic brainteaser may seem, the housing sector would be in even worse shape if not for those twin government sponsored enterprises, Fannie Mae and Freddie Mac, both in government conservatorship and bleeding assets," Blake wrote.
Blake was downbeat about the situation saying, "Such a scenario, a housing market propped up by Fannie and Freddie, several economic experts admit glumly, is akin to running a power plant on an auxiliary generator that is jumper-cabled to a car running on fumes."
He even noted that Fannie and Freddie are 79.9 percent owned by the federal government and 20.1 percent owned by the public, but he didn't mention how much the two GSEs could cost taxpayers. So far, the pair have cost roughly $160 billion, but according to Bloomberg could run up to nearly $1 trillion.
Furthermore, Blake wrote how Republican critics "immediately blasted" the Dodd-Frank financial reform bill for not addressing any of the GSEs problems but conceded that "no one on either side of the aisle has much to offer by way of solution:"
"Too big to fail, and too broke to fix," he concluded.
Blake, like others in the media, didn't bring up Sen. Richard Shelby's (R-Ala.) closing statement on financial reform in May when Shelby addressed Republican efforts to cap and reform Fannie and Freddie.
He buried proposals for a private sector solution until the fourteenth paragraph and waited until the eighteenth paragraph to quote Gilbert Leistner of the Chicago Board of Trade who proposed "euthanizing them."
The news media have recently ignored the cost of Fannie Mae and Freddie Mac's bailout, after years of ignoring the scandals and other problems at the two GSEs.
Like this article? Sign up for "The Balance Sheet," BMI's weekly e-mail newsletter.
