Laugh Tracks

Last week's turmoil was grist for wisecracking by everyone from Sen. Jim Bunning to Jon Stewart, the host of "The Daily Show."The Kentucky Republican was clearly peeved by a plan offered by the Treasury Department and the Federal Reserve Board to backstop Fannie Mae and Freddie Mac.

"When I picked up my newspaper yesterday, I thought I woke up in France," Sen. Bunning told Fed Chairman Ben Bernanke during his appearance Tuesday before the Senate Banking Committee. "But no, it turns out that socialism is here in the United States of America, and it's going very well."

Sen. Bunning was particularly perturbed by Treasury's proposal to establish the central bank as a systemic risk regulator.

"I'm not going to go along with that," he said. "The Fed wants to be a systemic risk regulator, but the Fed is a systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke a window playing baseball in the street a bigger bat and thinking that will fix the problem."

A seven-minute skit on Mr. Stewart's show included a riff on the government-sponsored enterprises' names, showing photos pairing Fannie Flagg with Bernie Mac, a fanny pack with Freddie Prinze Jr., and finally Tammie Faye Bakker with a Big Mac.

Trust us, it was funny.

Mr. Stewart also touched on the IndyMac Bancorp Inc. failure, showing a bucket of water bottles set out for depositors as they waited in long lines to withdraw cash.

The sign offering the refreshment put the word "water" in quotes.

"Maybe that's the bank's problem," he said. "Everything was in quotes. Are you making a 'deposit,' because if you are, you can certainly come back anytime for your 'money.' "

It's the Economy

During his two decades in Congress, Richard Baker developed a reputation as an articulate analyst of most things banking; he had a particular passion for GSE reform.Now the head of the Managed Funds Association, Mr. Baker made it clear over breakfast Thursday that he has kept a close eye on legislation designed to rescue the mortgage market.

"Something is going to pass that will be significant in scope," the Louisiana Republican predicted.

Whether efforts to help borrowers holding $300 billion of troubled loans will work will hinge largely on economic conditions, he said.

"If we get hit with an inflationary problem, and the Fed feels they have no choice but to raise rates, that is going to be a very difficult economic period for us. In a time of flattening housing values and rising interest rates, that is about the worst one-two you can have," Mr. Baker said. "So a government program — well intentioned, well crafted, and well done — if running into that headwind, will probably have less chance of having a measurable impact."

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