I've got a problem with spending before I get it...

...Used to say rapper Kanye West, in his platinum single "All falls down".

"All falls down", that is precisely what happened to the keepers of america's business model axiom : "spending before I get it".
Those keepers are Fannie Mae and Freddie Mac, mortgage giants who faced serious balance sheet troubles in early july, being rescued by the US government, and indeed, by the taxpayer.

Those firms' model was created so as to provide liquidity to the housing market. Fannie and Freddie bought the mortgages issued by the banks, then repackaged these loans as collateral for bonds called mortgage-backed securities. The debt issued so as to buy banks' mortgages was very cheap : fannie and freddie are GSEs (government sponsored enterprises), which means that the investors were conscious that the governement was ready to back the papers in case of default, hence the low interest rates. They made their earnings issuing cheap money on the market, and buying high yielding, more risky mortgages : this provided liquidity to the housing market, boosting the "spending before i get it"...

This model was doomed to failure, some says. The investors knew that the GSEs would be back by the governement in case of default, and then provided cheap money to GSEs. Which mean that investors were conscious that the government and the taxpayer were those bearing the risk, not Fannie Mae and Freddie Mac.

GSEs' system goes against one simple principle of capitalism : those who get the profits should take the pain. On our story, GSEs managers get the profit, US' governement takes the pain. Profits are privatised, risks are socialised.
But can we say that all profits from this model are privatised. On the opposite, should we say that the liquidity provided by the GSEs has helped poor americans to buy easily their own homes, the profits being socialised too?
Arguing this position would be hard, given the huge rate of disclosure : in some areas in the US, 1 of every 100 houses is disclosure, pushing poor citizens at jeopardy. Moreover, economists minimize the impact of the GSEs on the cost of borrowing and the access to credit