The Guardian’s Larry Elliott has written an excellent piece on Fannie Mae and Freddie Mac. I particularly like this passage:
But if the big financial institutions cannot – unlike, say, a car company or an airline – be allowed to founder, they also cannot be allowed to conduct themselves in the same way as companies where there really is a risk of failure. Congress will undoubtedly demand tougher regulations for the activities of US banks in exchange for bailing them out, and rightly so. If ever there was a time to bring in controls on the ability of banks to create unlimited amounts of credit, to restrict the more toxic forms of derivatives, to rein in the activities of hedge funds, to insist that remuneration structures are not biased in favour of reckless speculation, and to use anti-trust law to break up the power of the big institutions then this, surely, is it.