Keeping Fannie and Freddie off-budget is flirting with disaster

The National Review reports:

As Democrats continue to champion these “quasi-government” entitles, the Bush administration quietly announced on Friday (as all eyes were on Lehman) that though the government is now running the mortgage giants — and thus all of us are officially on the hook for their liabilities — it sees no need to incorporate their balance sheets and the business operations in the federal budget.

Does that sound familiar? It should. When managers who don’t happen to run the United States government decide to park their losses and liabilities off the books, we call that corporate fraud. When they did it at Enron (in a scam involving a pittance of what we’re talking about here), the execs went to jail for a long time. Even their accounting firm was prosecuted, causing countless employees who had nothing to do with the scheme to be put out of work.

Fannie and Freddie are a cautionary tale against the Left’s idée fix of private-public “partnerships.” Their sordid history of book-cooking and slush-fund earnings-management allowed top executives — in the main, political cronies of Democrat power-brokers — to qualify for millions in bonuses even as the behemoths were rotting from within.

You'll want to read the whole article.