This is a good idea?

According to the Wall Street Journal's real estate section, Fannie Mae and Freddie Mac are about to be unleashed. With the US Treasury's assistance, the Federal Housing Finance Board has cut the pair's capital requirements and told them to go buy mortgage-backed securities. The same mortgage-backed securities that no entity not backed by the US taxpayer will touch with a ten-foot pole. This is supposed to restore confidence in MBSIs. What it really does is allow a bunch of banking and investment houses to unload garbage and leave John Q. Taxpayer holding the bag.

Does anyone remember back to that dim and distant time 18 months ago when the capital requirements were raised? Fannie and Freddie, through a series of stupid maneuvers, were in trouble, overleveraged and threatening to founder. It would have required a bailout amounting to a serious pile of tax dollars. Instead, the regulators reined the pair in and increased their capital requirements to reduce leveraging.

That was then. Now, apparently, things are so bad that leveraging federal revenue (i.e. our taxes) is the least evil option. Frankly I find that hard to believe, simply because this looks too much like a straightforward bailout of the people who created this mess in the first place. If they can get Fannie and Freddie to buy their toilet paper for 50 cents on the dollar when its only worth 5, they make out like bandits and move on to their next publicly funded scam. If this be capitalism, Wall Street is definitely making the most of it.