D o w n s i z e r - D i s p a t c h

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Quote of the Day:
"The GSE structure serves to privatize profits and socialize losses."
-- Arnold Kling, The Cato Institute

Subject: Kill Fannie-stein and Freddie-stein

Politicians and bureaucrats have a good sense of timing for announcing
bad financial news. The ideal time to deliver bad news is either on a
weekend, or when the media is obsessing about other things, like
hurricanes, political conventions, and vice presidential choices. So it
was this last weekend when federal officials announced their intention
to nationalize Fannie Mae and Freddie Mac.

No one knows what the cost will be yet. It could be small. It could be
large. It could be astronomical. But whatever the price tag, YOU will
pay the bill. The good news is that the news isn't all bad. Both companies have been stripped of their lobbying arms, the
stockholders of both have been wiped out, and the current plan is to
start selling off the portfolios of each company. Now here's the bad
news . . .

The asset sell-off isn't scheduled to begin until 2010. That's a long
time. The policy could change by the time 2010 arrives, and there are
plenty of reasons why it would change. Fannie Mae and Freddie Mac have
always been good deals for the politicians. These GSEs (government sponsored enterprises)
have always been good places for government officials to land after
leaving federal employment. And GSEs give politicians plenty of
opportunities to reward favors.

We need to demand that Congress set these "too big to fail" monsters,
Fannie-stein and Freddie-stein, on the road to complete liquidation. We
have a new campaign that you can use for this purpose. This new
campaign will be used to oppose new spending bills as they come into
view. The message to Congress asks for overall spending cuts. You can
use your personal comments to ask for specific cuts. In this case . . .

Tell Congress that you never again want to pay to rescue a GSE --
government sponsored enterprise. Ask for legislation that will
liquidate Fannie and Freddie completely. You can send a message to your representatives in Congress with our easy-to-use Educate the Powerful System.

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Jim Babka
President
DownsizeDC.org, Inc.

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