It’s hard to know what Jake Tapper of ABC News was thinking when he wrote this post calling Sarah Palin “confused” for her comments about Fannie Mae and Freddie Mac. In fact, it was Tapper who must have been confused. Palin’s comments about Fannie and Freddie were correct. It was Tapper, calling them “private entities,” who needs to do his homework.
As my Heritage Foundation colleague Conn Carroll points out today, Tapper is just plain wrong:
Fannie and Freddie were never private entities. Fannie is a relic of the New Deal and Freddie was chartered by Congress in 1970. When Fannie was partially privatized, and since Freddie’s inception, both entities have benefited from an implicit federal guarantee of their outstanding obligations. If they were just ‘private entities’ as Tapper claims, they never would have been able to establish a massive duopoly in the U.S. mortgage market. Only because of their ‘government sponsored entity’ status were they able to lower their borrowing costs below what real ‘private entities’ had to pay.