Monday, August 19, 2013

What the interwebs coughed up - EconoSpeak: Why Are We Rushing To Get Rid Of Fannie Mae and Fr...

Given the "success" the banks have had in "banking reform" - where their actual illegalities are whitewashed and they have been freed of any obligation to the American People who bailed them out, it's no wonder they want to can off Freddie Mac and Fannie Mae.  Those two quasi public entities represent real, openly state-back competition to banks, and if you are BofA and want to get out of 30 year fixed mortgages, you want them off the table.

Turns out that would be economically . . . shortsighted . . . ill advised . . . unwise . . .  at least according to Barkley Rosser:

 Rather then eliminating them or returning them to their semi-private status where they are supposed to make money, increase the degree of state ownership and mandate them to play the roles that they were set up to play in the beginning (and Fannie goes all the way back to the New Deal), to act as backdrops and stabilizers of the US housing market.  Obama has said he wants to preserve the 30-year mortgage, but Harley hints that this may not happen with any of the currently proposed alternatives.  It is indeed the case that most nations lack such mortgages.  It was Fannie Mae that allowed the creation of them.  So, return Fannie and Freddie to their original functions and increase their backing from the state rather than reducing it.  Heck, their positive profits (at least for now) can even help further lower the budget deficit that most Americans do not even know is declining.

Read more at EconoSpeak: Why Are We Rushing To Get Rid Of Fannie Mae and Fr...:

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