The housing market seems at last to have bottomed out: Prices are rising at the fastest rate in seven years. Underwater mortgages, though still a drag on the economy, are becoming less of a burden. According to CoreLogic, a real estate data service, total negative equity was $628 billion at the end of 2012, down from $801 billion in 2009.
Principal reduction, therefore, is becoming yesterday’s issue. What matters for the future is a permanent fix to the mortgage-finance system. That means winding down Fannie and Freddie and building new structures free of their design flaw — socialized risks and privatized profits. Obama’s Treasury Department urged such a solution more than two years ago but has yet to propose legislation. That’s what the president and Congress should be working on now.
"NO ONE HAS POWER TWO WIND DOWN PROFITABLE COMPANIES.."
They were going to fail so they were shored up from preventing a total meltdown, this all happened during the TARP bailouts. The feds will restructure these two companies into a government owned entity without any public ownership. Shareholders will get nothing.
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