Fannie Mae (FNMA)

[MannSinger]

Failed Stupidest Idea: Divide GSE or TBTF banks

TBTF pushed to divide GSE into residential and rental business of GSE.

Benefit of Non-split GSE: If rental business goes down then residential business goes up and vice versa. In order to both businesses to survive they need to be under one company. Dividing GSE will increase overhead for both businesses and hence mortgage rate will go higher for both too. Splitting to remove impact of size is NOT the solution. They need to be regulated well.

TBTF Banks: If splitting is the good idea then Gov should split TBTF banks in to seven businesses- consumer banking, residential lending business, commercial lending business, rental lending business, residential MBS business, commercial MBS business and investment banking. If you do this all divided businesses will fail.

Dividing GSE is the stupidest idea pursued to implement and Billions already spend in separating IT and other infrastructure at GSE in spite of GSE's objection. Splitting business like GSE or TBTF is not like flipping switches. It will increase