I said it was ok for USB to continue to borrow and relend. Here is the dark side argument by Alex Gabor applied to Fannie Mae:
"In the book Buffettology, about Warren Buffett's approach to investing, a passage illuminates clearly Fannies problems when compared to another troubled company in America: "The phenomenon of a company growing only because money is being borrowed can be seen in the financial records of the General Motors Company, which indicate that between the beginning of 1985 and the end of 1994 it earned in total, approximately $17.92 a share and paid out in dividends approximately $20.60 a share.
"During this same time period the company spent approximately $102.34 a share on capital improvements.
"The question that should be running through your mind is, if Generals Motors' earnings during this time period totaled $17.92 a share and it paid out as dividends $20.60, where did the extra $2.68 that it paid out in dividends and the $102.34 that it spent on capital improvements come from?"
The answer: GM borrowed over a hundred billion dollars during the same period and has never paid it back, probably never will."