What to do with Fannie and Freddie?

Rick Moran
Run into the ground by mismanagement and criminal oversight failure by Democrats in Congress, Fannie Mae and Freddie Mac - taken over by the government in 2008 - appear to be on the chopping block entirely. A report, that was due at the end of January but will be released this week, will offer alternatives to keeping the twins in business.

New York Times:


The report will describe a plan for winding down the two companies, which were taken over by the government in 2008. Initial steps will include preventing the companies from buying loans larger than $625,500, and increasing the fees they charge for loan guarantees, according to officials who spoke on condition of anonymity so as not to pre-empt the official release.The report will describe reforms in other areas of the mortgage business, including enhanced borrower protections, changes in mortgage servicing to address the industry's failure to work with borrowers who fall behind on payments, and new steps to clean up loan securitization, the bundling of loans for sale to investors.

House Republicans, meanwhile, outlined a plan last year to end government ownership of the two companies, and campaigned on the issue in the fall. But they have since adopted a more cautious posture. Instead of pushing forward with legislation, they have scheduled a hearing for Wednesday to weigh alternatives.

The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business.

Government dictating customer service requirements for loan companies? They'll probably use the IRS to train loan officers. That'll work. Perhaps Obama could explain the industry's "failure" in preventing people from simply walking away from their responsibilities as a debtor without even trying to work out an agreement. Any penalty for doing that? Guess not.

One can only guess at what "enhanced borrower protections" might be. The FinReg monstrosity criminalized for loan executives the stupidity of customers who don't read what they sign and don't ask questions if they can't understand what's in the loan contract. That's not protection enough? Maybe they'll advocate executing loan officers if a customer gets behind in their mortgage. It can't be his fault - gotta be the evil businessman's doing.

It will be expensive to close down Fannie and Freddie. But it will be cheaper in the long run if we simply rid ourselves of these meddlesome, incompetent quaisi government agencies.





Run into the ground by mismanagement and criminal oversight failure by Democrats in Congress, Fannie Mae and Freddie Mac - taken over by the government in 2008 - appear to be on the chopping block entirely. A report, that was due at the end of January but will be released this week, will offer alternatives to keeping the twins in business.

New York Times:


The report will describe a plan for winding down the two companies, which were taken over by the government in 2008. Initial steps will include preventing the companies from buying loans larger than $625,500, and increasing the fees they charge for loan guarantees, according to officials who spoke on condition of anonymity so as not to pre-empt the official release.

The report will describe reforms in other areas of the mortgage business, including enhanced borrower protections, changes in mortgage servicing to address the industry's failure to work with borrowers who fall behind on payments, and new steps to clean up loan securitization, the bundling of loans for sale to investors.

House Republicans, meanwhile, outlined a plan last year to end government ownership of the two companies, and campaigned on the issue in the fall. But they have since adopted a more cautious posture. Instead of pushing forward with legislation, they have scheduled a hearing for Wednesday to weigh alternatives.

The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business.

Government dictating customer service requirements for loan companies? They'll probably use the IRS to train loan officers. That'll work. Perhaps Obama could explain the industry's "failure" in preventing people from simply walking away from their responsibilities as a debtor without even trying to work out an agreement. Any penalty for doing that? Guess not.

One can only guess at what "enhanced borrower protections" might be. The FinReg monstrosity criminalized for loan executives the stupidity of customers who don't read what they sign and don't ask questions if they can't understand what's in the loan contract. That's not protection enough? Maybe they'll advocate executing loan officers if a customer gets behind in their mortgage. It can't be his fault - gotta be the evil businessman's doing.

It will be expensive to close down Fannie and Freddie. But it will be cheaper in the long run if we simply rid ourselves of these meddlesome, incompetent quaisi government agencies.