Douglas Holtz-Eakin penned the above title in a WSJ article on 25 May, 2016. The gist; During the 2008 financial imbroglio these two “government sponsored entities” were put into conservatorship with the taxpayers contributing $188 Billion to bail them out. These two agencies buy mortgages and package them to sell as bonds.
The hope was they would be reconstituted and run better next time. Someone was smoking something in the cloak room to hope for that, they are giant honey holes for Congress to “reform society” and put their friends in place. Being government they get lower interest rates than banks and if they mess up WE get the bill.
Fanny and Freddie are the very embodiment of crony capitalism that the Bern, HRC and the Donald rant about. They are a defacto state owned enterprise in the United States, kind of like China, or our friend Putins’ place.
Why is it that it has become a right to own a house? If we agree home ownership is a good thing is there a better way to put forward that policy without exposing the taxpayers to this kind of risk, maybe a more free market oriented solution? Maybe cities looking at how much cost they load on builders that increases the cost of housing by 20-30-40%. Maybe renting is a better idea than buying at certain times in your life. Maybe being more vertical is a good idea, seems to work in New York.
Driving a social policy through by threatening banks with regulation and fine hell has been proven to be stupid.