William Poole has long warned that mortgage titans Fannie Mae and Freddie Mac had grown so large that they posed a serious threat to the U.S. financial system. It looks like the former Federal Reserve policymaker had it right. Stocks of both companies are in meltdown mode this week, sending ripples through U.S. markets, on fears that they don't have the capital they'll need to survive rising mortgage defaults. So let's admit the obvious, Poole suggests: Fannie and Freddie should be nationalized. In America, nationalization is among the dirtiest of words. It conjures the image of the government grabbing control of private-sector assets. But Fannie and Freddie, which buy or guarantee mortgages to support the housing market, are strange animals. They are owned by shareholders, but they wer...
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