Fannie Mae and Freddie Mac desperately need to be de-privatized. Any bailout plan that doesn't move in that direction is an error.

But then the government is stuck with a bad business. If there isn't any other player in the industry who can take over, maybe it would be better to create a _new_ government agency, along the lines of what Fannie Mae initially was, and use the bailout money to buy their assets during bankruptcy, without taking in all the overhead and debt too.

Two, minimize damage from the failure. This bailout may stick in everyone's craw but it may be cheaper than the alternative.

But then again, if throwing money at the company will prevent an economic disaster, maybe throwing the same amount of money to their clients/creditors would offer the same economic buffer, while still letting the companies fail.

If a company is too big to fail, I say make it small enough to fail, not prevent it from failing.

via Outside the Beltway.......

There are two parts to the corrective measures. One, examine what led to the problem and make sure it doesn't happen again. Structural changes must be made to head off these problems in the future.

Two, minimize damage from the failure. This bailout may stick in everyone's craw but it may be cheaper than the alternative. The negative consequences should be directed toward the management and board of directors. Letting the two entitites fail could send negative consequences to the entire country. Which is the better choice of the two even if they are both bad? I think the bailout is the lesser of evils.

Now let's see some firings to show those jackasses there are consequences for running things into the ground.

[T]he notion of “too big to fail” means that those who behave badly often keep the benefits when things go well but pass off the negative consequences of failure.

I think that's being unduly cynical. But I repeat myself.