Friday, October 10, 2008

Quite Low?

From the mailbag:

Hi Peter,
Another reason why Siglitz might not be the best Nobel Prize to rely on, for now, is that when he worked for Fannie Mae he flunked big time ...

The reader includes a link to this 2002 study, "Implications of the New Fannie Mae and Freddie Mac Risk-Based Capital Standard," which was co-authored by none other than Joseph Stiglitz.  The study's conclusion?  "[T]he exposure of the government to the risk that the GSEs [that is, Fannie and Freddie] will become insolvent appears quite low."