Fannie Mae: Recap and Release” Not an Option—But Neither is Status Quo

ValueWalk - October 22, 2015 - October 23, 2015

By Amanda Maher

With housing finance reform at an impasse, and with Fannie Mae and Freddie Mac investors growing increasingly impatient, there’s growing risk that this public-private partnership that’s been in place since the New Deal era will grind to a halt. If the government continues to hoard all the profit, investors have no chance of making good on their investments. If they can’t make good on their investments, investors will stop buying shares of the companies—again putting taxpayers at risk of a bailout.

Despite the back and forth between the government, the companies’ and their shareholders, there’s one thing that’s for certain: U.S. taxpayers continue to face the greatest risk. Housing finance reform is needed to transfer risk away from taxpayers and the GSEs to the private sector. Yet dismantling Fannie Mae and Freddie Mac isn’t a reasonable option, either. We need these GSEs to continue buying up mortgage from private lenders in order for lenders to offer the lower interest rates that make homeownership a reality for many Americans.

Read the full article: Fannie Mae: Recap and Release” Not an Option—But Neither is Status Quo