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Saving Fannie and Freddie

The WSJ's front page this morning features an important-sounding 1,500-word article on contingency plans for Fannie Mae and Freddie Mac, recapitulating Katie Benner's article in Fortune yesterday. What would the government do if the companies ran into trouble? What could it do? We learn that people in the Bush administration have been asking such questions, which is prudent and sensible. But we don't learn what kind of answers they might be leaning towards.

What, exactly, is the problem? Well, as William Poole is keen to point out, if Fannie and Freddie were forced to liquidate their assets tomorrow, they couldn't raise enough money to pay off their liabilities.

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