Charles Lane: Fannie and Freddie continue to confound By Charles Lane Posted: 07/29/2013 12:01:00 AM CDT | Updated: about 8 hours ago
The dysfunctional system of public risk and private profit that brought down Fannie Mae and Freddie Mac, at huge taxpayer expense, is dead and buried -- unless, of course, a federal judge resurrects it for the benefit of a few lucky hedge funds.
Impossible, you say? Well, here's what's going on: Before the Great Recession, Fannie and Freddie were privately owned entities that guaranteed mortgage-backed securities. They were also "government-sponsored," a special status that conferred both a "public purpose" (fostering homeownership) and implicit federal backing for the risks they took to fulfill that role while making profits for their shareholders.
Government should get out -- and this wild card of a court case is one more reason to do so sooner rather than later.
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