Of Good and Bad Bailouts

"With portfolios of almost $3 trillion, capital of $65 billion, and no obvious end to the fall in home values, the continued solvency of Fannie Mae and Freddy Mac has to be in question. ... Since no one can predict where the bottom of the housing market may be, it is important to recognize that a loss of say, 3% on portfolios of $3 trillion would easily wipe out what is left of their capital. ... Congress will have no choice but to bail out the institutions--possibly with as much or more taxpayer money than it used to bail out the S&L industry only 15 years ago. ... The fact that insolvent S&Ls were allowed to operate through much of the 1980s was the major source of the losses they ultimately imposed on the federal government and the taxpayers. ... With the powers of a receiver, the GSE's regulator could if necessary reorganize the companies, reduce their assets and liabilties, and possibly keep them afloat", Peter Wallison (PW), in the WSJ, 29 November.

One minute, we know PW. He wrote a piece I blasted on 18 October. Now PW wants to discipline Fannie and Freddie. Why not Citigroup? Does PW think Citigroup should operate if insolvent? What about Goldman Sachs (GS)? Citigroup's most recent 10-Q filing showed $127,754 and $2,220,866 million of equity and total assets respectively, a 5.75% ratio; GS's most recent 10-Q showed $39,118 and $1,045,778 respectively, a 3.74% ratio. Does PW think Citigroup and GS are adequately capitalized? Does he know what their assets are worth?