
When Government Funds Business - jasonlbaptiste
http://www.avc.com/a_vc/2009/03/when-government-funds-business.html
======
anamax
> Disaster strikes when the government steps in to cut ostensibly frivolous
> expenses,

Govt run biz can't resist the temptation to do "good things", no matter how
economically dumb, and to make sure that no politican has an unemployed
relative.

Fannie Mae and Freddie Mac are prime examples. (Yes, I know that they were
supposedly independent, but look at the political connections of the board and
senior execs.)

~~~
MaysonL
Look at their default rate on the mortgages they wrote compared to the rest of
the industry. (Hint: it's a lot lower)

~~~
jibiki
Can you post a source for that? The following blog states the opposite:

[http://thurbersthoughts.blogspot.com/2009/02/chicago-tea-
par...](http://thurbersthoughts.blogspot.com/2009/02/chicago-tea-party-and-re-
default-rates.html)

"(Side note: Fannie Mae and Freddie Mac had higher default rates than
traditional lenders. I'm sure there's an entire blog post for the implications
of this fact alone.)"

On the other hand, this blog indicates the other way:

[http://seekingalpha.com/article/82074-six-quotes-from-
fannie...](http://seekingalpha.com/article/82074-six-quotes-from-fannie-mae-
on-the-mortgage-industry)

I'm more inclined to believe a random HN comment than a random blog, but it
would be nice to have a source either way.

~~~
MaysonL
[http://www.realtytrac.com/ContentManagement/pressrelease.asp...](http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=5681&accnt=64847)
foreclosures in the US were on about 1.8 percent of all households.

[http://www.fanniemae.com/media/pdf/newsreleases/form10k_news...](http://www.fanniemae.com/media/pdf/newsreleases/form10k_newsrelease_022609.pdf)
foreclosure rates hit a high of .65 percent (annualized) in the third quarter
on Fannie's portfolio. Note: they stopped foreclosing in December, so their
rate dropped in Q4.

Given that the first figure is for _all_ households, including those owned
free and clear, it's pretty likely that Fannie and Freddie are seeing
substantially lower default rates than the rest of the industry.

------
falsestprophet
Disaster strikes when the government steps in to cut ostensibly frivolous
expenses, like enormous bonuses for traders for example, which absolutely
necessary to conduct business. Traders at America's largest banks are packing
up for hedge funds and foreign banks.

