To say anything at all would be way too much. From the Wall Street Journal:
“The remedy here is…as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.
His comments initially rippled through bond markets on concerns that the government might pull away from the mortgage market. Many believe that’s unlikely and that any revamp would include continued government involvement. The government took over the companies in September 2008 as loan losses mounted.
Some Republicans have argued that the companies should ultimately be reduced in size and privatized, while at other end of the spectrum, some analysts have recommended turning the companies into government agencies. But several industry groups and academics have suggested that the government is likely to continue playing at least some role in the future of the companies.
One such report came from analysts at Standard & Poor’s this past week. “It’s hard for us to imagine” how enough capital could be attracted to replace Fannie and Freddie with stand-alone private companies that would be able to offer low-cost funding for 30-year fixed-rate mortgages, the analysts wrote.
Some analysts have argued that starting from scratch could create more problems than they would solve, in part because Fannie and Freddie own or guarantee around half of the nation’s $11 trillion in home mortgages. “Blue sky ideas are great, but they take a long time to happen,” said Mahesh Swaminathan, senior mortgage strategist at Credit Suisse, at a conference last month. “When you have $5 trillion of agency mortgages, you can’t really orphan them.”
Mr. Frank, who didn’t elaborate on forthcoming recommendations, said last month that one possible revamp could merge some functions of Fannie and Freddie that overlap with the Federal Housing Administration into the government mortgage-insurance agency.
Jeff Brown says:
Tom — How Frank retains any credibility or dignity is beyond my rational ability to comprehend.
January 23, 2010 — 8:49 am
Monica Arlington says:
My husband use to work at Freddie. He says it was just an extension of the government, even though it was “privatized.” If Freddie and Fannie go away, Frank will need another gov’t run organization so they can control the market.
January 23, 2010 — 8:51 am
Al Lorenz says:
There’s nothing the market needs like even more uncertainty.
January 23, 2010 — 10:02 am
Tom Johnson says:
I had a real flame comment earlier. Mindful of the proprietor’s wishes for no flaming comments, here’s the link:
http://www.businessandmedia.org/printer/2008/20080924145932.aspx
January 23, 2010 — 7:59 pm
Doug Quance says:
Here’s an interesting chronology starting back in 2004:
January 24, 2010 — 11:10 am
Kevin Cottrell says:
Fannie and Freddie appear to be a political death spiral. With Frank’s and other congressional commentary and this weeks Geithner lynchmob session, it’s probably a matter of who soon not if at this point.
January 30, 2010 — 12:42 pm