Let Fannie and Freddie go under

Freddie’s decision to tap the $200bn facility pledged by the Treasury when it seized the company and its peer, Fannie Mae, will add to the government’s bill for rescuing the battered financial sector.

I got an idea. Let Fannie and Freddie go under.

Spend the billions instead to sponsor new entities to do the exact same thing as Fannie and Freddie.

Let the investors in Fannie and Freddie eat the losses, not the taxpayers.

Let the taxpayers front the money to create new entities with clean slates. It will be far cheaper.