Bust Up These Beasts

Bust Up These Beasts - Forbes.com:
by Steve Forbes
"The Treasury/Fed/Congressional rescue of Fannie Mae and Freddie Mac is only a stopgap. Unless fundamentally restructured, these two debt-bloated giants will sooner or later blow up.

The once implicit, now explicit, government guarantee for these two quasi-government entities was the reason that they could be leveraged to the hilt, with a debt-to-equity ratio of almost 25-to-1. Instead of just packaging mortgages and selling them off, the companies kept hundreds of billions in these instruments in their own portfolios to fatten profits--and enrich their politically connected managers and political allies. They also went into the junk-mortgage business, buying more than $170 billion worth of dodgy paper."