WSJ Editorial On Eliminating Fannie Mae Angers Longs

ValueWalk - December 29, 2014 - December 30, 2014

ValueWalk, By Michael Ide

Over the weekend the Wall Street Journal put out an editorial extolling the CBO for “showing how easily the U.S. could transition to a free market that doesn’t threaten taxpayers” by eliminating Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and getting out of the mortgage market entirely. The editorial was sure to anger Fannie Mae longs (it has), and shows how differently the two sides of this debate view the role of the GSEs.

The main question for policymakers and for Main Street is whether Fannie Mae and Freddie Mac are necessary to ensure that Americans have access to 30-year mortgages. The CBO report claims that they aren’t: it says that access wouldn’t drop significantly and interest rates would go up by about 60 basis points.

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