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There are two reasons to take steps that both prevent Fannie and Freddie from going under and make shareholders and executives take serious hits. The first is that this is the only way to avoid moral hazard: people's tendency to take unnecessary and stupid risks when they are not going to wind up paying for them. If shareholders actually lose their money, and executives have to be content with -- sniff! -- two million a year, that might just do the trick. (Note: I'd be fine restricting compensation limits to people who are presently on board, not new hires. It's the people who got us into this who need to pay some sort of price, so that the next time around, people might think twice. I'm also open to the idea that Baker's particular suggestions are wrong. It's the principle of holding investors and executives accountable that I care about, not any one particular idea about how best to do this.) More
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lsanderson

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