Via Ace. It’s long, but we’ve had lots of requests for it and you’ve got time on a slow Sunday afternoon. What happens when a policy with good intentions is built on a foundation of bad financial sense? Ask the New York Times, which saw this coming almost 10 years ago. September 30, 1999:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

And now here we are. Click to listen.