You could say that--unless you read the remainder of Krugman's column, which notes the inadequate capital requirements imposed on Fannie-Freddie because
the companies' management bought off the political process, systematically hiring influential figures from both parties.
P.P.P.S.: Is this risk of corruption any less with a) "purely public enterprise" than with b) a public-private hybrid like Fannie Mae or c) a purely private enterprise (like, say, the Blackstone Group)? Interesting question. I would think well-connected liberal operatives like Johnson would be capable of at least perverting a regulatory regime even if they headed a 100% federal, civil-servicized Fannie Mae. (Most "regulation" is in category (c) of course, where the risk of corruption seems somehow undiminished by the triumphant "Fannie-Freddie experience.") ...
Update: See semi-clarifying semi-correction. ... 2:00 P.M.
Didn't subprime poster villain Angelo Mozilo do Barack Obama a big favor by compromising Obama's initial VP vetter, Jim Johnson, with favorable loans, causing Johnson to step down from his position? How bad would today's headlines be for Obama if Fannie Mae fatcat Johnson was still heading up his vice-presidential search effort? ... 10:45 P.M.
A reader emails:
People seem to think it's somehow a stroke of political genius that Sen. Obama is taking Sen. Hagel with him on his trip to Iraq. But why doesn't this highlight Obama's lack of judgment on the surge, by bringing along the man who considered it a catastrophically bad idea?
Actually, Hagel called the surge "the most dangerous foreign policy blunder in this country since Vietnam." ... Is Obama cannily trying to demonstrate why Hagel would be a horrifying VP pick? Is he trying to deflect attention from his own poor surge judgment ("the surge has not worked") by bringing along as a lightning rod someone whose judgment was even worse than his? ... Imagine how embarrassing it would be if Obama went with an antiwar Republican like Gen. Zinni, who supported the surge, with what now looks like contrarian wisdom. ... 1:40 A.M.