The Corner

When Stiglitz Flunked

From the mailbag:

Hi Peter,

Another reason why Siglitz might not be the best Nobel Prize to rely on, for now, is that when he worked for Fannie Mae he flunked big time …

The reader includes a link to this 2002 study, “Implications of the New Fannie Mae and Freddie Mac Risk-Based Capital Standard,” which was co-authored by none other than Joseph Stiglitz.  The study’s conclusion?  “[T]he exposure of the government to the risk that the GSEs [that is, Fannie and Freddie] will become insolvent appears quite low.”

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