Friday, January 21, 2011

Fannie and Freddie Rise Again

Apparently Fannie and Freddie are like the zombie who won't die. This piece in today's NYT tells us that some of the large banks would like to take over Fannie's and Freddie's activities, complete with government guarantees (explicit this time). Apparently the large banks would like to convince us that 30-year mortgage contracts and mortgage subsidies are essential for the pursuit of happiness. So long as Fannie and Freddie are going the way of the dinosaurs, they would be happy to take over for them. This is of course to be expected, and you can't blame them for trying, but what a bad idea.

1 comment:

  1. "Fannie and Freddie play a central role in our housing finance system and must continue to do so in their current form as shareholde­r-owned companies. Their role in the housing market is particular­ly important as we work through the current housing correction­. The GSEs now touch 70 percent of new mortgages and represent the only functionin­g secondary mortgage market. The GSEs are central to the availabili­ty of housing finance, which will determine the pace at which we emerge from this housing correction­. ...

    OFHEO has reaffirmed that both GSEs remain adequately capitalize­d. At the same time, recent developmen­ts convinced policymake­rs and the GSEs that steps are needed to respond to market concerns and increase confidence by providing assurances of access to liquidity and capital on a temporary basis if necessary.­"