Fun with Fannie and Freddie

As I wrote back on 27 March ("This is a good idea?"), Fannie Mae and Freddie Mac have had their capital requirements reduced so they can save the mortgage markets. They also had their limits increased dramatically so they may now acquire Alt-A size mortgages, even though Alt-A is shaping up to be a bigger meltdown than subprime. And even though Fannie and Freddie posted multibillion dollar Q1 losses. Guess what, folks, you're in the mortgage business, making the world safe for stupid mortgages. Your tax dollars at work.