Paul Krugman on regulation of Fannie Mae and Freddie Mac

So whatever bad incentives the implicit federal guarantee creates have been offset by the fact that Fannie and Freddie were and are tightly regulated with regard to the risks they can take. You could say that the Fannie-Freddie experience shows that regulation works.

~ Paul Krugman, "Fannie, Freddie and You," The New York Times, July 14, 2008