Letter: Absolute power corrupts absolutely

In regard to George Will’s column on the Fannie and Freddie fiasco, the rest of the story is as follows:

Prior to 2008 the bank regulators (Fed, FDIC, Office of the Comptroller of the Currency) were telling bank executives to put excess reserves in Fannie and Freddie preferred shares because they were safe investments. This turned out to be really bad advice. Fannie and Freddie investments became almost worthless. Many banks had to write them off and take TARP bailout money.

The whole process was due to bad government policies that encouraged banks to make mortgage loans without verifying the income, employment or credit history of borrowers. Of course the loans went bad and since 80 percent were guaranteed by Fannie and Freddie, the government sponsored enterprises had to be rescued. But the banks were incorrectly blamed by everyone for what happened. It was actually the regulators and politicians who caused the financial crises.

I thank Will for reporting on how the government is continuing to rob us and violate the rule of law by confiscating 100 percent of dividends from the GSEs. Absolute power corrupts absolutely.

This story was originally published May 12, 2016 at 5:57 PM with the headline "Letter: Absolute power corrupts absolutely."