We recognize that in times of financial exigency, as this clearly is, government often steps in to do what it can to stop the hemorrhaging. Politically, it may not have a choice. But we can't forget that many, if not most, of the problems in the financial sector today are a result of government over-regulation, or misregulation, and political cronyism.
We've already documented how Fannie Mae and Freddie Mac were used as a jobs program for out-of-work Clinton administration officials and other Democrats, ranging from Franklin Raines to Jamie Gorelick to Jim Johnson.
And how tens of millions of dollars in political donations from those two government-sponsored enterprises distorted decision-making in Congress. This has been the problem all along.
The U.S. government regulates the private sector on behalf of taxpayers who expect competency, fairness and transparency.
But when the federal government messes up, those principles go out the window. And the lender of last resort isn't the Fed or Treasury, as some would have it. It's always the taxpayer.
Remember this when a Democrat-led Congress holds hearings — as House Speaker Nancy Pelosi now promises — and lambastes "the private sector" and "Bush economic policies" for these market meltdowns. Neither deserves the blame.
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