September 7, 2013.

(picture to be added soon)

Five Years Later, Fannie Mae, Freddie Mac Remain Unfinished Business

For the moment it was too difficult to go on. He shut his eyes and pressed his fingers against them, trying to squeeze out the vision that kept recurring. He had an almost overwhelming temptation to shout a string of filthy words at the top of his voice. Or to bang his head against the wall, to kick over the table, and hurl the inkpot through the window----to do any violent or noisy or painful thing that might black out the memory that was tormenting him.

WASHINGTON----Of all the temporary patches the U.S. government slapped onto the sinking financial system in September 2008----from pumping money into banks to rescuing insurer American International Group Inc. AIG -1.01%----none was more urgent to then-Treasury Secretary Henry Paulson than saving mortgage giants Fannie Mae FNMA +0.81% and Freddie Mac FMCC -0.88%.

Your worst enemy, he reflected, was your own nervous system. At any moment the tension inside you was liable to translate itself into some visible symptom. He thought of a man whom he had passed in the street a few weeks back; a quite ordinary-looking man, a Party member, aged thirty-five to forty, tallish and thin, carrying a brief-case. They were a few metres apart when the left side of the man's face was suddenly contorted by a sort of spasm. It happened again just as they were passing one another: it was only a twitch, a quiver, rapid as the clicking of a camera shutter, but obviously habitual. He remembered thinking at the time: That poor devil is done for. And what was frightening was that the action was quite possibly unconscious. The most deadly danger of all was talking in your sleep. There was no way of guarding against that, so far as he could see.

"It was the single most important thing we did to prevent disaster----real disaster," said Mr. Paulson in a recent interview. But five years later, he adds, "it didn't occur to me that we'd be here with nothing done."

He drew his breath and went on writing:

Fannie and Freddie remain the largest single piece of unfinished business from the financial crisis. As record profits have replaced huge losses, some now question whether cosmetic changes could substitute for the more radical overhaul of the companies envisioned five years ago.