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Think Enron Was Bad? 'Fredron' and 'Fanron' May Be Worse

Fannie Mae and Freddie Mac (Fan and Fred) contributed mightily to the mortgage and housing messes, which have now come back to bite them -- and taxpayers -- hard.

Given the week's news, this USA Today item from 2006 drips with irony:

As Enron's former top executives face criminal trial in Houston Monday, the legacy of Enron -- the most sensational corporate fraud scandal in recent history -- still ripples through the business world.

The company remains a symbol of corporate greed and hubris and one of the costliest U.S. bankruptcy reorganizations ever.

Gee, I wonder what that makes the government bailout of Fan and Fred?

Let there be no doubt: Enron was a fraud of massive proportions. Investor losses amounted to $60 billion or more. It rightly dominated the headlines for months.

But as this is being written early Tuesday morning in the U.S., it's less than 72 hours after the government takeover of Fan and Fred. Incredibly, the story, with the exception of hosannas about the markets' response, is virtually out of the headlines.

Yet Fan and Fred "hold or back more than $5 trillion in mortgage debt" and "taxpayers are now on the hook for as much as $200 billion."

The ultimate taxpayer exposure can't be estimated. Interest rate increases of even a point or two would radically reduce the mortgage portfolios' value, and the full extent of their exposure to troubled and foreclosed loans is unclear. Further, the agony will be prolonged if the workout moves at the typical snail's pace speed of government.

The contrast between the treatment of Enron and how the two "government-sponsored enterprises" (GSEs) have been handled thus far is stark.