Treasury tried to head off such concerns by having David McCormick, the
undersecretary for international affairs, call foreign central banks and other
overseas buyers of the companies’ securities or debt to reassure them of the
instruments’ creditworthiness. Over the weekend, Treasury officials called
sovereign-wealth funds in Abu Dhabi and elsewhere in the Middle East, assuring
them that they were working on financial issues involving Fannie and Freddie,
says an individual apprised of the conversations.
Here is much more, interesting throughout. Read this too. But no, the buyers forced the hand of our government by essentially threatening, through inaction, to induce a massive run on the uninsured U.S. financial institutions. One response is to insure all of those institutions, as the dominoes continue to fall. Another response is to believe that runs on unprotected financial institutions are not very dangerous. The third, correct response is…?