The teetering of Fannie Mae and Freddie Mac has underscored a major shift in US finance, writes Peter S. Goodman in the New York Times—once simply another guarantor, the government has effectively become the only lender in town "for millions of Americans engaged in the largest transactions of their lives." As commercial banks flee the market and credit dries up, Fannie and Freddie are now buying two-thirds of new mortgages.
Once American policymakers believed that "markets were sacred, and regulation heresy," writes Goodman. But the light-touch oversight of the Greenspan era, which more liberal analysts blame for the excesses that produced the credit crunch, has given way to a highly regulated system in which the government ensures that loans are made in the first place. One economist summed up the change: "If you’re a socialist, you should be happy."