Joe Nocera for The New York Times: Don't Kill Fannie Mae

August 12th, 2013

The New York Times
by Joe Nocera
August 12, 2013

Could it get any worse for Fannie Mae and Freddie Mac? Last week, even President Obama joined the growing chorus of those who want to put them out of business.

He did so in a speech in Phoenix, outlining — at long last — his ideas for reshaping the country’s housing finance system. He called for the housing finance market to be primarily driven by private capital, with a “limited” federal role. He said that the 30-year fixed-rate mortgage should remain a mainstay of the mortgage market. And he essentially endorsed a recent bipartisan Senate bill — a complex piece of legislation that calls for winding down Fannie and Freddie over five years.

Let’s just call this what it is: capitulation. Every since the financial crisis, Republicans have insisted that Fannie and Freddie — private companies that also have a government role, and that guarantee and securitize mortgages — were the root problem. According to their theory, the two companies drove the country off the subprime cliff, primarily because of their federal mandate to help make it possible for low-income borrowers to own homes.

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