Why Bailouts Stinkand Why We Need Them

They may seem unfair to prudent taxpayers who ducked the housing frenzy, but lessons from the Depression show why federal rescues are necessary

Congress and the White House moved with surprising speed (measured by Washington legislative time, of course) last month to pass a bill aimed at bailing out the U.S. housing and mortgage markets. Like all legislation these days, the 694-page bill contains a grab bag of initiatives, but the most important elements put the full faith and credit of the federal government behind mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) while creating a program designed to help hundreds of thousands of troubled borrowers avoid foreclosure on their homes.

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