Fannie Mae, Freddie Mac Should Be Eliminated, (Barney) Frank Says

Wall Street Journal ^ | JANUARY 22, 2010 | NICK TIMIRAOS And MICHAEL R. CRITTENDEN

[DogByte6RER]

Fannie Mae, Freddie Mac Should Be Eliminated, Frank Says

By NICK TIMIRAOS And MICHAEL R. CRITTENDEN

A top House Democrat on Friday said his committee was preparing to recommend "abolishing" mortgage-finance giants Fannie Mae and Freddie Mac and rebuilding the U.S. housing-finance system from scratch.

"The remedy here is...as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.

His comments initially rippled through bond markets on concerns that the government might pull away from the mortgage market. Many believe that's unlikely and that any revamp would include continued government involvement. The government took over the companies in September 2008 as loan losses mounted.

Some Republicans have argued that the companies should ultimately be reduced in size and privatized, while at other end of the spectrum, some analysts have recommended turning the companies into government agencies. But several industry groups and academics have suggested that the government is likely to continue playing at least some role in the future of the companies.

One such report came from analysts at Standard & Poor's this past week. "It's hard for us to imagine" how enough capital could be attracted to replace Fannie and Freddie with stand-alone private companies that would be able to offer low-cost funding for 30-year fixed-rate mortgages, the analysts wrote.

[patriot preacher]

Why? To cover his tracks? To hide the evidence? What’s he up to? It ain’t cause he’s suddenly a fiscally responsible Capitalist!

[Gordon Pym]

Frank’s a representative. He’s up for re-election every two years.

And Brown won big in his district

[jbp1]

this is where conservatives need to ‘play it back’ to the dumrats. ‘agree’ that we need to abolish FM and FM, and get that to happen first. then conservatives can stop any further efforts to replace either one with a gov’t org.

as far as business goes, gov’t needs to stay out except to catch, prosecute and punish crooks. gov’t should, if anything, sponsor watchdog organizations that can monitor and record and report on unethical or rancid businesses and then let the consumer make their choice. then darwin can take over.

including themselves

[supremedoctrine]

“What did Barney say about Freddie’s Fannie?”
-—The only punchline I could come up with
in less than the 10 seconds I reserve for these
riddles is:
“Mae I, Mac?”
Here’s hoping this is not an old joke, and I just discovered
the punchline on my own. I hate to be robbed that way.

[supremedoctrine]

“What did Barney say about Freddie’s Fannie?”
-—The only punchline I could come up with
in less than the 10 seconds I reserve for these
riddles is:
“Mae I, Mac?”
Here’s hoping this is not an old joke, and I just discovered
the punchline on my own. I hate to be robbed that way.

[Kirkwood]

Like a snake shedding its skin.

[Vaduz]

Your right if they get investigated Frank will get hit hard,no pun intended.

[MrB]

ooops...
Yes, Frank is up for re-election EVERY election.

[Leo Carpathian]

jus rename them Bwawny Fwag...

[Logic n' Reason]

ooops...
Yes, Frank is up for re-election EVERY election.

You can see how much I pay attention to clowns, idiots, and oxygen wasters!!

However, you've given me good news....vote that scum out of office, for pete's sake!!!

[SeaWolf]

“I smell a rat.”

As do I. I agree with the end of Freddie and Fannie but when the arch Socialist suggest it there must be an IDE somewhere along the road!

[nvskibum]

The fundamental problem with the mortgage market is that making mortgage loans is risky. Making lousy mortgage loans is even riskier. When things get bad, they can get bad suddenly for all real estate loans in short order. The interest rate on mortgages needs to be high enough to cover the risk--and the profits in good times need to be available to absorb the losses in bad times. Rates should be, maybe, 7,8,9%? But that is politically unacceptable--people like Barney want "cheap" mortgages.

If mortgage rates are decreed to be cheaper than what the market would otherwise demand, somebody needs to bear the risk. The risk cannot be made to go away by any form of hand-waving by the government.

Freddie and Fannie were lucky for many years until they rolled a "7". They were a way to hide the risk (they were very complex organizations, hard to understand), but the risk was always there. Because they were so large, everybody knew that the taxpayers ultimately would be on the hook.

If Freddie and Fannie are abolished, the risk will be formally placed on you and me as taxpayers. But it has always been there--the taxpayers got lucky until 2007.

This is the real issue--how should our economy absorb the risk of mortgage lending. Coming up with the best answer will not be easy. This is particularly true if the profits made in good times are allowed to be separated from the losses in bad times.

[adorno]

Fannie Mae, Freddie Mac Should Be Eliminated, (Barney) Frank Says

I'm with Barney on this one.

Not because I favor what he's done or what he proposes to do or what he might really have in mind.

I favor this move simply because it's an opportunity to open up a can of worms. Once the can of worms is opened up, the opportunities to reform, or to undo, or to disband the agencies, are opened up.

Once discussions of reform are opened, investigations on the agency can be opened up and perhaps true reform which aids the housing market and the economy, can be undertaken.

Once the discussions on reform are started, neither Barney nor his liberal cohorts should be allowed to take the initiatives or to set the terms of reform.

[BooBoo1000]

The two Mae's worked very well for many years. It wasn't until Bill Clinton Barney Franks, and Senator Christopher Dod decided it would be good business and lots of votes, to reduce the requirements for home loans.There was nothing wrong with the system, just the Democrats tinkering with it that caused all of the trouble.

[Califreak]

I smell Cloward-Piven

[nvskibum]

>>>The two Mae's worked very well for many years.<<<

Actually, that is not correct. In the late 70's-early 80-s, Fannie Mae was massively insolvent to the tune of several billions of dollars (it was a smaller institution then). This was due to another risk of mortgage lending (a risk different from credit risk) that was hidden --the interest rate risk of making long term fixed rate mortgages funded by short term borrowings. This blew up at the time when interest rates skyrocketed- Fannie was stuck with lots of money-losing, low yielding fixed rate mortgages. The problem was swept under the rug at the time.

This is why the administration of the great Ronaldus Magnus and a number of conservative economic thinkers, strongly opposed the role of Fannie and Freddie in the 80's. Unfortunately, due to the lobbying power of Fannie and Freddie, they got nowhere in Congress. People thought that having Freddie and Fannie absorb the risk of mortgages was a "free-lunch" way to have "cheap" mortgages. But TAANSTFL, and the taxpayers were on the hook then, as now.

[Republic]

Oh dear me! Ol barney wants to save his big fat overworked ass by discarding Mae and Mac....dear oh dear...these two institutions were so CAREFULLY protected by Barney's refusal to allow them to be investigated when he was chair of house finance committee when GW was asking for both mortgage institutions to be overhauled and cleaned up!

Bwarney Wefused!!!

Dear oh dear what a WICKED WEB we WEAVE when first we practice to deceive!!

My guess......Bwarney is twying to save his job!!!

[Yo-Yo]

“What did Barney say about Freddie’s Fannie?” -—The only punchline I could come up with in less than the 10 seconds I reserve for these riddles is: “Mae I, Mac?” Here’s hoping this is not an old joke, and I just discovered the punchline on my own. I hate to be robbed that way.

Funny! And original! My comment wasn't a riddle, it was just me trying to play on words. But your answer makes my stupid attempt at humor actually worth the bandwidth! Thanks!

[Para-Ord.45]

Barney then when he KNEW otherwise: ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

[supremedoctrine]

No, thank YOU!
You just confirmed my private gloating when I came up with that in a “DAMN,I’M GOOD!” moment, and realized all the pieces fell into place-— even the gender-order, was right.
How do I do it?
I practice.
Check my other 6000 replies in the past 3 1/2 years.
And there were probably more than that , going back to March 1998.
But that’s another story.And another screenname.