# Palin has no idea how Fannie Mae and Freddie Mac operate **URL:** \ **Category:** Great Debates\ **Created:** [September 8, 2008, 8:26pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665 "2008-09-08T20:26:30Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![The\_Hamster\_King](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@The\_Hamster\_King](https://boards.straightdope.com/u/The_Hamster_King)\ **Post date:** [September 8, 2008, 8:26pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/1 "2008-09-08T20:26:30Z")
At [a press conference today](http://www.mcclatchydc.com/227/story/51940.html) Sarah Palin said: “And that’s why John McCain has been calling for years to reform things and cut bureaucracy even at the lending agencies our government supports. The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain / Palin administration will make them smaller, and smarter, and more effective for homeowners that need help.” **The thing is … Fannie and Freddie aren’t taxpayer supported!** They’re independent corporations. Here we are in the middle of a major housing crisis and the Republican candidate for Vice President doesn’t have the first clue of how the system operates. She could have said: “The government shouldn’t be in the mortgage business at all! We should shut down Fannie and Freddie and leave this sort of thing to the free market.” Or she could have said: “If the government is going to back up Fannie and Freddie with public funds we need more oversight! The McCain / Palin administration will make sure regulations are in place to prevent the sort of irresponsible lending that got us into this mess.” But saying that Fannie and Freddie are too expensive to taxpayers? That the problem with them is too much bureaucracy? That’s just mind-numbingly stupid … . ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [September 8, 2008, 8:30pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/2 "2008-09-08T20:30:46Z")
Here’s a handy link for Palin to get up to speed on all those nitpicky things she knows little about like foreign policy and the economy: > **[Main PageWelcome to Wikipedia](https://en.wikipedia.org/wiki/Main_Page)** > > Airport Central railway station is an underground Transperth commuter rail station at terminals one and two of Perth Airport in Western Australia. The station is located on the Airport line and is one of three stations that were built as part of the Forrestfield–Airport Link project, which consists of 8 kilometres (5 mi) of twin bored tunnels and three stations. Construction began in May 2017 following preparatory work. By January 2018, excavation was complete, and in May 2018 the two tunnel bori... ---
**Author:** ![Stranger\_On\_A\_Train](https://avatars.discourse-cdn.com/v4/letter/s/13edae/32.png) [@Stranger\_On\_A\_Train](https://boards.straightdope.com/u/Stranger_On_A_Train)\ **Post date:** [September 8, 2008, 8:37pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/3 "2008-09-08T20:37:05Z")
You miss the point. The point is that Obama doesn’t have the kind of experience in international relations and executive military command that Palin has on her record. Jeez, we’re in the middle of a war to save America from the terrorists and you’re worried about a teensy weensie little financial crisis? What, do you want the terrorists to win? Stranger ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [September 8, 2008, 8:40pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/4 "2008-09-08T20:40:38Z")
> [@Pochacco](#): > > At [a press conference today](http://www.mcclatchydc.com/227/story/51940.html) Sarah Palin said: “And that’s why John McCain has been calling for years to reform things and cut bureaucracy even at the lending agencies our government supports. The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain / Palin administration will make them smaller, and smarter, and more effective for homeowners that need help.” > > **The thing is … Fannie and Freddie aren’t taxpayer supported!** As of yesterday they are. ---
**Author:** ![KarmaComa](https://avatars.discourse-cdn.com/v4/letter/k/e36b37/32.png) [@KarmaComa](https://boards.straightdope.com/u/KarmaComa)\ **Post date:** [September 8, 2008, 8:45pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/5 "2008-09-08T20:45:38Z")
This story confuses me. Wasn’t she supposed to be sequestered from the media? How did this happen? ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [September 8, 2008, 8:47pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/6 "2008-09-08T20:47:04Z")
Fannie Mae and Freddie Mac have always been taxpayer supported in that it was understood that they would be bailed out by the taxpayer if anything happened. This covering of downside risk gave them an advantage in terms of attracting money. The top levels of bureaucracy had been pushing them to expand their market share in sub-prime loans. Had they stayed smaller and refused to take out riskier loans, they would not be in the mess they are currently in. Palin is partially correct. For a good background on this read Arnold Kling’s essays at econlog. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [September 8, 2008, 8:51pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/7 "2008-09-08T20:51:03Z")
> [@Pochacco](#): > > At [a press conference today](http://www.mcclatchydc.com/227/story/51940.html) Sarah Palin said: “And that’s why John McCain has been calling for years to reform things and cut bureaucracy even at the lending agencies our government supports. The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers. The McCain / Palin administration will make them smaller, and smarter, and more effective for homeowners that need help.” > > **The thing is … Fannie and Freddie aren’t taxpayer supported!** They’re independent corporations. Here we are in the middle of a major housing crisis and the Republican candidate for Vice President doesn’t have the first clue of how the system operates. I realize that it’s _de rigeur_ here at the tolerant and fair-minded SDMB to immediately assume to worst possible interpretation of anything containing the substring PALIN. Nonetheless, I think it bears mentioning that the last line of the paragraph that quotes Governor Palin says: > [@](#): > > The takeover may result in a taxpayer bailout during reorganization. Given that she was not not delivering a prepared paper, and a certain amount of less than academic rigor may be found in her comments, is it barely possible she meant that the likelihood of a federal bailout during this forced “receivership” is what would be expensive for the taxpayers? ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 8, 2008, 8:51pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/8 "2008-09-08T20:51:23Z")
> [@puddleglum](#): > > Fannie Mae and Freddie Mac have always been taxpayer supported in that it was understood that they would be bailed out by the taxpayer if anything happened. This covering of downside risk gave them an advantage in terms of attracting money. The top levels of bureaucracy had been pushing them to expand their market share in sub-prime loans. Had they stayed smaller and refused to take out riskier loans, they would not be in the mess they are currently in. Palin is partially correct. > For a good background on this read Arnold Kling’s essays at econlog. I disagree. From my reading, Palin implied that McCain has been lobbying for years to trim down the taxpayer-funded organization of the mortgage guarantors. This is what is criminally stupid, as they are not government agencies. The government was always assumed to be the bearers of the FM risk, but the organizations themselves were up until now completely private. McCain had no more power to lobby for them to be trimmed down than he could lobby to have people laid off at Microsoft. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [September 8, 2008, 8:52pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/9 "2008-09-08T20:52:12Z")
Doesn’t seem mind-numbingly stupid to me. There has been an implied government guaranty of both entities. This implied guaranty would presumably be taxpayer backed. ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 8, 2008, 8:58pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/10 "2008-09-08T20:58:15Z")
> [@LonghornDave](#): > > Doesn’t seem mind-numbingly stupid to me. There has been an implied government guaranty of both entities. This implied guaranty would presumably be taxpayer backed. This doesn’t make any sense to me. If FM had gotten “too big for the taxpayers”, then why is the government buying it? ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [September 8, 2008, 9:00pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/11 "2008-09-08T21:00:51Z")
Jake Tapper was also confused and wrote the McCain campaign. [http://blogs.abcnews.com/politicalpunch/2008/09/a-confusing-com.html](http://blogs.abcnews.com/politicalpunch/2008/09/a-confusing-com.html) ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [September 8, 2008, 9:01pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/12 "2008-09-08T21:01:57Z")
> [@Bricker](#): > > Given that she was not not delivering a prepared paper, and a certain amount of less than academic rigor may be found in her comments, is it barely possible she meant that the likelihood of a federal bailout during this forced “receivership” is what would be expensive for the taxpayers? So Palin is claiming that McCain is against Bush’s bailout/takeover? Really? ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [September 8, 2008, 9:11pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/13 "2008-09-08T21:11:03Z")
> [@Bricker](#): > > I realize that it’s _de rigeur_ here at the tolerant and fair-minded SDMB to immediately assume to worst possible interpretation of anything containing the substring PALIN. I realize it’s _de rigeur_ for you to fling out blanket insults towards the Democrats on this board, but would it be so hard for you to contain it to the Pit? You know, we rude and knee-jerk libruls aren’t the only ones who take issue with, and see serious problems with what she said. > [@](#): > > Economists and analysts pounced on the misstatement, saying it demonstrated a lack of understanding about one of the key economic issues likely to face the next administration. > > “You would like to think that someone who is going to be vice president and conceivable president would know what Fannie and Freddie do,” said Dean Baker, co-director of the Center for Economic and Policy Research. “These are huge institutions and they are absolutely central to our country’s mortgage debt. To not have a clue what they do doesn’t speak well for her, I’d say.” > > [http://mnpublius.com/2008/09/palin-doesnt-understand-housing-crisis/](http://mnpublius.com/2008/09/palin-doesnt-understand-housing-crisis/) P.S. You might benefit from heeding the [the advice of your fellow conservative, David Frum](http://boards.straightdope.com/sdmb/showpost.php?p=10169565&postcount=341). ---
**Author:** ![Kyrie\_Eleison](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kyrie_eleison/32/7682_2.png) [@Kyrie\_Eleison](https://boards.straightdope.com/u/Kyrie_Eleison)\ **Post date:** [September 8, 2008, 9:23pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/14 "2008-09-08T21:23:07Z")
It’s refreshing to see a high-profile Republican acknowledging that from time to time, the federal government has to step in and make adjustments to the free market economy in order to improve its efficiency. I wish the McCain/Palin administration the best of luck in making these lending agencies “smaller, smarter, and more effective,” and hope my conservative friends will join me in welcoming the day when they can similarly turn their attention to the transportation, health care, and energy industries. That is what she meant, right? ---
**Author:** ![pseudotriton\_ruber\_ruber](https://avatars.discourse-cdn.com/v4/letter/p/a9a28c/32.png) [@pseudotriton\_ruber\_ruber](https://boards.straightdope.com/u/pseudotriton_ruber_ruber)\ **Post date:** [September 8, 2008, 9:29pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/15 "2008-09-08T21:29:28Z")
Would you guys PLEASE stop alerting Palin to the major gaps in her knowledge? I’d like Joe Biden to point out all her foot-in-mouth remarks sequentially next month, all at once. Wait, how long is that debate? What? Biden has only that long to speak, and then turn his time over to Palin to explain herself? Okay, proceed, then. No harm, no foul. ---
**Author:** ![Hamlet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hamlet/32/2818_2.png) [@Hamlet](https://boards.straightdope.com/u/Hamlet)\ **Post date:** [September 8, 2008, 9:35pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/16 "2008-09-08T21:35:44Z")
> [@Bricker](#): > > Given that she was not not delivering a prepared paper, and a certain amount of less than academic rigor may be found in her comments, is it barely possible she meant that the likelihood of a federal bailout during this forced “receivership” is what would be expensive for the taxpayers? Sure, if you think verb tense means nothing, or that it was a misspeaking not a lack of knowledge. She said: “The fact is that Fannie Mae and Freddie Mac **have gotten** too big and too expensive to the taxpayers.” Generally, “have gotten” refers to a past occurrence, not a future possibility. I’m sure it is possible that she’s extremely well informed about the banking crises, the War in Iraq, and the myriad of other things we don’t know about her. And I suppose she could have meant “have gotten too big and [will be] too expensive to the taxpayers.” I just think those possibilities fly in the face of common sense. ---
**Author:** ![hansel](https://avatars.discourse-cdn.com/v4/letter/h/6bbea6/32.png) [@hansel](https://boards.straightdope.com/u/hansel)\ **Post date:** [September 8, 2008, 9:36pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/17 "2008-09-08T21:36:45Z")
The plain reading of Palin’s quote is that she believes Fannie and Freddie to have been funded by the taxpayers. She’s not referring to a bailout, or the guarantee of a bailout. She’s plainly saying that historically they have cost the taxpayers money, and it’s gotten to be much. I’m sympathetic to gaffes, especially from someone in the middle of a crash course on federal issues, but let’s not kid ourselves that it wasn’t a gaffe. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [September 8, 2008, 10:16pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/18 "2008-09-08T22:16:13Z")
> [@Shayna](#): > > I realize it’s _de rigeur_ for you to fling out blanket insults towards the Democrats on this board, but would it be so hard for you to contain it to the Pit? You know, we rude and knee-jerk libruls aren’t the only ones who take issue with, and see serious problems with what she said. And to support your claim that you liberals aren’t the only ones who take issue with her comments, you provide a cite to [mnpublius.com](http://mnpublius.com), which is a reasonably politically neutral collection of reports and blogs. Like these titles on the [mnpublius.com](http://mnpublius.com) home page: “Great New Obama Ad.” “Reactions to KSTP’s Bizarre RNC Love Letter.” “The Nation on Coleman’s Campaign Conflicts.” (For those unaware, Coleman is the Republican Senator from Minnesota). “Norm Coleman’s Head in the Sand.” “Mad Magazine Runs Ad for McCain/Palin.” Frankly, and intending no disrespect to any posters here, I would say that “rude, knee-jerk liberals” pretty well describes the population at [mnpublius.com](http://mnpublius.com). And for this reason, I do not believe it supports either: a. Your claim “we rude and knee-jerk libruls aren’t the only ones who take issue with, and see serious problems with what she said.” b. Your implied claim that her statement was unambiguously wrong or indicates any lack of understanding. c. Your implied claim that neutral economists are in general agreement that her statement is in error. > [@](#): > > P.S. You might benefit from heeding the [the advice of your fellow conservative, David Frum](http://boards.straightdope.com/sdmb/showpost.php?p=10169565&postcount=341). I’ll get right on that. I expect to be done some time after you heed the advice of your fellow Democrat Joe Liberman. ---
**Author:** ![Merkwurdigliebe](https://avatars.discourse-cdn.com/v4/letter/m/74df32/32.png) [@Merkwurdigliebe](https://boards.straightdope.com/u/Merkwurdigliebe)\ **Post date:** [September 8, 2008, 10:22pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/19 "2008-09-08T22:22:15Z")
Don’t worry, Soon she’ll make a mistake that clearly shows she isn’t ready for the job. You guys defending her are going to have a much harder time defending her actions in the future, I feel. If they get elected you know how it’s going to end. We could easily dig up quotes by ex-Bush-now-Palin supporters giving Bush the same generous benefit of the doubt. Why the GOP want more “shoot-from-the-hip” cowboy types still is pretty much beyond me. They fall for it again and again, and the country loses. How about you choose people who take a sober and measured assessment of the situation? What the hell is wrong with that? The world is a bit more complicated than an effing John Wayne western. ---
**Author:** ![Diogenes\_the\_Cynic](https://avatars.discourse-cdn.com/v4/letter/d/e99b99/32.png) [@Diogenes\_the\_Cynic](https://boards.straightdope.com/u/Diogenes_the_Cynic)\ **Post date:** [September 8, 2008, 10:25pm UTC](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665/20 "2008-09-08T22:25:45Z")
> [@Bricker](#): > > I realize that it’s _de rigeur_ here at the tolerant and fair-minded SDMB to immediately assume to worst possible interpretation of anything containing the substring PALIN. > > Nonetheless, I think it bears mentioning that the last line of the paragraph that quotes Governor Palin says: That’s not a quote from palin, it’s the author of the article _commenting_ on Palin. Follow the quotation marks: > [@](#): > > McCain’s running mate, Alaska Gov. Sarah Palin, speaking in Colorado Springs, Colo., said Fannie and Freddie had “gotten too big and too expensive to the taxpayers.” The companies, however, aren’t taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization. You want to rethink that defense now? [Next page](https://boards.straightdope.com/t/palin-has-no-idea-how-fannie-mae-and-freddie-mac-operate/462665.md?page=2)