Rich Tucker

It used to be that if somebody did a poor job but didn’t want to fix it, he’d shrug and say, “Well, that’s good enough for government work.” But these days, that’s the problem. Too much of our work is government work. In everything from housing to high finance, the hand of government is pulling the strings.

“Over 29 years in business, we’ve always thought of ourselves as being in the free-enterprise system,” Peter Lansing, president of a Colorado mortgage firm, recently told The Wall Street Journal. “Today I think of myself as a government contractor.”

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And indeed he is. Lansing says some 80 percent of the loans his company handles are now backed by the Federal Housing Administration. That number was 20 percent a few years ago.

Nationwide, the Journal reports, the FHA backs a quarter of all loans, up from 2.7 percent in 2006. Apparently, federal involvement in the mortgage markets worked out so well with Fannie Mae and Freddie Mac that Uncle Sam is giving it a third shot.

Who’s surprised that things look bleak?

The Mortgage Bankers Association reports that almost 8 percent of FHA loans were 90 days (or more) late or in foreclosure at the end of the second quarter. Just a year ago, that number was 5.4 percent. “They’re probably going to need a bailout at some point because they’re making loans in a riskier environment,” mortgage-industry consultant Edward Pinto told the Journal. As a former chief credit officer at Fannie Mae, he’s seen this film before, and adds, “I’ve never seen an entity successfully outrun a situation like this.”

Thus when it comes to housing, taxpayers may soon be saying, “Fool me twice, shame on me. Fool me a third time, get ready for another federal bailout.”

Of course, it’s not just the housing market that’s in Washington’s hip pocket. So is high finance.

“The Treasury and the Federal Reserve are embroiled in everything from credit cards and home loans to auto manufacturing, from overseeing executive pay to shaping boards of directors,” a front-page story in The Washington Post reported on Sept. 13.

“In the old days, Washington was refereeing from the sideline,” Mohamed el-Erian, chief executive officer of Pimco, the world’s largest bond fund, told the paper. “In the new world we’re going toward, not only is Washington refereeing from the field, but it is also in some respects a player as well.”

And businesses are finding that Washington has an advantage: It doesn’t necessarily have to play by the same rules everybody else does.

Rich Tucker

Rich Tucker is a communications professional and a columnist for