Fannie Mae (FNMA)

[10bambam]

Don’t Mess With Fannie Mae and Freddie Mac

Lately they've been doing fine, and ill-advised reform won't help.

By Editorial Board September 13, 2019, 4:30 AM CDT
Maybe leave it alone?
Subscription teaser


It’s official: The Trump administration has a plan to deal with mortgage giants Fannie Mae and Freddie Mac — by returning them to the same quasi-governmental form that set them up for failure in the 2008 financial crisis. If executed, it’s likely to be a win for a small coterie of hedge funds, and a big loss for everybody else.
Fannie Mae and Freddie Mac play a central role in U.S. housing finance. By guaranteeing payments of interest and principal on home loans (in return for a fee), they make the ubiquitous 30-year mortgage possible. For decades, they operated as a public-private hybrid. Their congressional charter to promote homeownership created a perception of government backing, which allowed them to get by with extremely little capital and deliver outsize profits to their private shareholders. The perception became reality after the housing bust, when they suffered overwhelming losses and the government had to rescue them at taxpayer expense.

https://www.bloomberg.com/opinion/articles/2019-09-13/fannie-mae-freddie-mac-plan-puts-taxpayers-in-bailout-risk-again