In the magazine: Bailout Nation

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That article about Fannie and Freddie that I asked for help on the other day is on newsstands now (in the issue with working-men Obama and McCain on the cover) and online here. I really did take the questions asked by commenters here into account as I wrote it, even though I don’t think I used any of them verbatim. I was writing the piece for magazine readers who might not have been following this story at all, so I was trying to keep things pretty simple. I will take a look at your questions again and maybe take a whack at answering a few here on the blog. Although the Frannie takeover is already started to seem like ancient history, isn’t it?

Anyway, the article begins:

In what is getting to be something of a habit, Treasury Secretary Hank Paulson ruined his own and a lot of other people’s weekend by choosing the morning of Sunday, Sept. 7, to announce the seizure of money-losing mortgage giants Fannie Mae and Freddie Mac.

Fannie and Freddie are–childish names and all–by far the biggest financial institutions ever taken over by the U.S. government. Their bailout amounts to a stunning return to government control over the U.S. financial system, incongruously led by a former Wall Street boss (Paulson) working in what is purportedly a conservative Republican Administration.

It’s also yet another episode in a now year-old financial crisis that shows no signs of abating. Paulson’s announcement briefly rallied stock markets around the world. But jittery investors kept running for the exits at Seattle-based thrift Washington Mutual and the investment bank Lehman Bros.–although Lehman’s earnings announcement on Sept. 10 sent the stock up slightly, despite the revelation of a $3.9 billion quarterly loss.

Americans not versed in financial-market arcana can be forgiven for scratching their heads at all this and wondering what the heck is happening and what it means for them. Here are a few answers. Read more.

That thing about Lehman stock price being up slightly after the earnings announcement was true when I wrote it a couple hours before the market closed Sept. 10, but it’s certainly not true anymore. Shoulda found a different way to phrase that, I guess.

A couple of links: The Brad Setser quote is from this excellent post on his excellent blog about global capital flows, Follow the Money. And the “three California real estate scholars” who wrote a paper arguing “that it was in fact the absence of Fannie and Freddie and their reasonably tight underwriting standards that caused the bubble” are Kerry Vandell and Major Coleman IV of University of California, Irvine, and Michael LaCour-Little of California State University at Fullerton. Barbara wrote about their paper (pdf!) on this here blog in July.

Why weren’t those links included in the story as published online? I’ll let Scott Karp explain:

The problem is that the editorial workflow for most newsrooms doesn’t include a process whereby journalists can collect source links as part of their research process and provide them as work product to be published on the web along with the article.