U.S. Rethinks Roles of Fannie, Freddie

Isn’t this something we should have addressed before the crisis? Indeed, weren’t there people trying to get changes made at Fannie and Freddie for years? Now, government wants to rethink their roles? Rethink them how? To figure out how best these institutions can benefit politicians? Or the banks who make their campaign contributions?

Here’s that is meant by rethinking their roles:

A series of policy options compiled from various sources by Andrew Davidson, a mortgage-industry consultant, calls for turning Fannie and Freddie into cooperatives owned by the lenders that sell mortgages to them. These cooperatives would package mortgages into securities for sale to investors. Unlike Fannie and Freddie, the cooperatives wouldn’t own large amounts of loans and related securities on their books. To make the securities more attractive to investors, Treasury would receive fees for agreeing to cover any losses on the securities above a certain level.

Doesn’t a cooperative exist for the benefit of its members? Why should the taxpayer guarantee this cooperative against any losses? What do we get in return? Fannie and Freddie need to be shut down. Subsidizing the mortgage market is a big part of the reason we’re in this mess; we don’t need to “rethink” it. We need to end it.