Replies to post #172101 on Fannie Mae-No Politics (FNMA)

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Spoken like a former CEO of Goldman Sachs would, true to his comrades. No mention of bank subprimes being forced on F&F that were 'disguised' as AAA rated. No mention of how the banks took advantage of low interest rates, a booming housing market and lax government regulation to push subprimes on folks who were ill qualified to ever pay them back. This man has no conscience.

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Paulson went on to say that he's much less concerned about the big banks right now than he is about the mortgage market. Flawed housing policies, like the mortgage interest rate reduction for example, helped to create the mess we got in, and we need to rethink the way our country deals with these matters.

Fannie Mae and Freddie Mac, he said, need to be wound down into much smaller entities with far more limited missions. That will make the mortgage market less risky for tax payers in the future.

The problem with that, of course, is that now that the crisis is over Fannie and Freddie are making money for the government, so there's no political incentive to unwind them.

"We're sowing the seeds for another major problem," Paulson said.

He wants more housing market risk in the hands of private entities, but it has to be done correctly.