Protecting the economy and homeowners: Four ways to restore Fannie and Freddie

Bloomberg Government - January 21, 2016 - January 22, 2016

By Robert Shapiro

President Obama was right to boast about the American economy’s recent achievements in his State of the Union address. American businesses have come back from the Great Recession and created more than 14 million jobs, along with record profits. One happy result is today’s 5 percent unemployment rate, half the level in the second half of 2009. U.S. growth also has outpaced the gains by the world’s other major, developed economies for five years. Yet, one key aspect of the 2008-2009 crisis remains largely unaddressed – namely, the arrangements we use to finance housing.

This matters, because the right housing finance reforms could lower the likelihood of another crisis and increase the strength of this expansion. Moreover, the Obama Administration and Congress clearly have the ability to carry out those reforms, especially by rewriting the operating terms and mission requirements of Fannie Mae and Freddie Mac, government-sponsored enterprises now run by the federal government.

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