Fannie and Freddie in a interview a year ago

Bruno points me to this article from the Washington Post from the 8th of August when the subprime crisis got started...

Falls Church, Va.: Do we even know that Fannie and Freddie are operating normally? When was the last time they published clean reports?

Even setting aside their internal-control problems, if we allow Freddie and Fannie to take on a more risky portfolio, aren't we just transferring risks from private investors onto the taxpayers? Why is that a beneficial result?

Steven Pearlstein: Look, this line that anytime Fan and Fred buy a paperclip, it is transferring cost or risk to taxpayers is just malarky. These two entities have never, ever cost the taxpayer a dime. In fact, they make money for the taxpayer because they make lots of money and pay taxes on it. Yes, they have an implicit government
guarnatee, and yes, that is worth something to their shareholders and their customers. But if they didn't have that, the taxpayer wouldn't save any money. It is a non-cash benefit, if you will.

Their internal control problems are fixed. They still have to go back and restatate some of their books, but that is an accounting issue, not a cash flow issue. They are sound. They are well run. They know what they are doing. And they could be of remendous help right now if they were allowed to be aggressive and creative in providing liquidity to a whole bunch of mortgage markets that have now frozen. They could also provide money and standards and mechanisms that would faciliate
the workout process between subprime borrowers who are in default and the entitites that hold their mortgages. Rather than Fan and Fred having to push the government for permission to do these things, regulators should be beating down their doors to get them to do more faster. The analogy I used this morning to katrina is very apt.