Fannie Mae and The Black Swan

In response to the trouble at Fannie Mae — its stock plunged — we havethis:

“There is a sort of a panic going on and that’s not what ought to be,” said Senator Christopher J. Dodd, the Connecticut Democrat who heads the Senate banking committee. “The facts don’t warrant that reaction, in my view.”

Mr. Dodd said that he was persuaded by conversations with Mr. Paulson and Mr. Bernanke that the two companies “are fundamentally sound and strong.”

Nassim Taleb begs to differ — a year ago:

The government-sponsored institution Fanny Mae, when I look at their risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deemed these events “unlikely.”

A footnote on p. 226 ofThe Black Swan, published April 2007. Asked to comment on the Fannie Mae situation, Taleb replied, “I discuss events before, not after. I despise postdicters.”