Tuesday, March 3, 2009

Depend on Govt to sit on Fannie

Excerpt from an NYT article today……  (pointer from MR see right)

“There is a commitment to restructure these companies, and we are going to want to retain a hand in the things that matter, like affordable housing and making sure that the housing economy doesn’t become a threat to the entire economy again,” said Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee. “Some of what these companies did will be returned to the private sector, and some of it is going to remain with a public entity.”

Republican lawmakers — many of whom believe the federal government should not be involved in the mortgage business at all — have signalled they will try to end the government’s involvement with Fannie and Freddie, even as they acknowledge that effort is likely to fail.

And lawmakers of all stripes are quietly voicing worries that government involvement in the mortgage industry could lead to the very problems that caused the current crisis.

“When you use mortgage companies for political purposes, such as helping low-income borrowers or expanding homeownership, you make bad economic decisions,” said Mr. Garrett, the Republican congressman. “And bad economic decisions are why we’re in this trouble right now.”

Analysts say that one reason Fannie Mae and Freddie Mac were privatized in the first place was to prevent political whims from dominating the mortgage marketplace. “

These two examples of half pregnancy have to be amongst the biggest rent seeking scams ever perpetrated.

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