Freddie and Fannie

It is not uncommon to hear some right-wingers say that Government intervention in the economy is the preserve of Left politics. That this is untrue can be seen from the past - all that has differed has been the scope of such intervention and the purposes served.

A further case in point is today's news that Freddie Mac and Frannie Mae are to be bailed out by temperorary Public Ownership. As the Guardian website reports

The US government today announced the biggest financial bailout in the country's history as it took troubled mortgage giants Freddie Mac and Fannie Mae into temporary public ownership to save them from collapse.

The US treasury secretary, Henry Paulson, said the Federal Housing Finance Agency, hitherto the two companies' regulator, would henceforth run the companies in a state of "conservatorship" and the two chief executives would be replaced by new men.

Paulson had briefed presidential candidates Barack Obama and John McCain over the weekend about the plan. McCain gave it his immediate backing but Obama said he would reserve judgment until he saw further details, adding that determining the future of the companies would be a top priority if he won the White House.

Interestingly, the Republican McCain gave immediate backing.

Governments of whatever hew will step in pretty quickly if some business is deemed of sufficient importance. As the Guardian writes

The US government was forced to announce a plan to prop up the finances of the troubled mortgage giants in July. Paulson said then that Washington would buy up shares in the two companies and underwrite their ballooning debt, which has risen to around $800bn (£452bn) each. Congress at the time approved lending unlimited amounts to the two companies or taking a stake in them if they ran into real trouble.

The two companies have lent or underwritten about $5.3 trillion of the total $12tn of outstanding mortgage debt in the United States. Freddie and Fannie have long been considered as being too big to be allowed to fail.