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WSJ Looks a Little Foolish Now   Why I'll Miss Trent Lott
Nov 20 2007 1:41PM EST

Back Off, OFHEO--But Only a Bit

My man Felix is right that stringent capital requirements for Fannie Mae aren't a great idea right now. But let's not forget how Fannie got them in the first place, through accounting regularities that may not have been Enronesque were still pretty bad leading to billions in restated earnings, the resignation of Franklin Raines as CEO and a general mess. Over the long run, the federal charter is deeply worrisome. Private gain, socialized risk. It's a mess.Part of the reason, Fannie Mae stood up relatively well until now is because of the cap requirements. I'm not sure loosening up radically is going to do anything to get the stock back up but it will, at lease, mean taking care of more of the mortgage detritus.

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