The article goes on to say that the bailout of Fannie Mae and Freddie Mac was good because it helped buoy the housing markets. It does say that the bailouts were not free of cost however because of the moral hazard the US government has enabled.
But that’s not the half of it. There are lots of other costs associated with the bailouts. For instance, where did that money come from? Were there not better uses for that capital? Also what about those of us who thought this was still a capitalist country and were looking forward to picking up a house once prices became reasonable? Many people refused to play the bubble game because they (apparently unlike Mr. Bernanke) could see that no doc loans and 0% down mortgages were likely to end in a swift downturn in prices.
And though prices did crash in some parts of the country, they didn’t in my estimation crash enough to warrant a 30 year mortgage for the most part. (Because a floor was put into the housing market.) But the banks wanted to inflate the mortgages they had on the books at all cost, so as usual, the banks opted to help themselves, capitalism and the price mechanism be damned. Not that we should expect anything more.