Somebody asked me the other day—whose fault is it that Freddie and Fannie are on the ropes? Is it the fault of the greedy execs? Inadequate monitoring and oversight? Did Congress mess up?
I actually think this is an emergent mess that evolved out of no one's design. An alliance of bootleggers and baptists that created something that was no one's intention but that served many people well until it fell apart. It's a study in flawed incentives and institutional design. The lesson is that government agencies work best when we know what they're doing and there is some measure of accountability, even if it's only political.
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Bootleggers and Baptists: (Pigs Don't Fly: The Economic Way of Thinking about Politics )
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