Will Someone Please Put a "Hit" on Fannie and Fred?
Ever get stuck with something you really, really didn't want to get stuck with? Sure you have. We all have. And, when it comes to those darlings of the mortgage world, Fannie and Freddie, we are so stuck with them, they almost seem to have been written into the Constitution, sort of like another branch of government.
In some ways, they are.
As a depressing Wall Street Journal article points out, just about a year and half after Fannie Mae and Freddie Mac jointly got their first big fixes of federal bailout money, there appears to be, as the Journal neatly headlines it, "No exit in sight."
Fannie and Freddie have become those unwelcome guests who won't leave and can't seem to be convinced to go home!
Just about Christmas time, when most of use were busy trying to figure out how to afford holiday gifts, the Treasury, the Journal reminds us, quietly announced "there would be no limit to the taxpayer money it was willing to deploy over the next three years" to keep Fannie and Freddie happy, fat and content. And, of course, to try and keep as many Americans as possible in their homes.
According to the article, some employees have voiced concern about the future of this couple, to which Freddie Mac CEO Charles Haldeman Jr. assured them, "We're doing what's best for the country."
Since they were put under conservatorship in Sept. 2008, we, the taxpayers of America, have given these Bobbsey Twins roughly $111 billion of our money. And now, they've been promised an unlimited charge card entitling them to even more of it!
Why? Well, the two companies are practically the only things greasing the wheels of the housing market right now. Along with the Federal Housing Administration, they fund nine in 10 American mortgages, the Journal points out.
But the fact that no one in government seems to have a blueprint for how to ween Fannie and Freddie off the public's teat is, and should be, troubling to all.
Last month, sounding a bit like a Mafia Don putting out a hit, Rep. Barney Frank (D-MA) said that Fannie and Freddie should sleep with the fishes (if I may paraphrase). "The committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," he said. Brando couldn't have said it better.
Frank is holding a hearing next month on the Fannie and Freddie situation and to explore new approaches to housing finance. Finally, we may get some notion how this relationship might eventually come to an end.
Some argue that Fannie and Freddie are especially needed now to help the administration's mortgage loan modification program, though, thus far, that has not exactly been a booming success.
Clearly, something needs to change in the way home financing is done in this country (or not done, it would seem nowadays). At some point, someone will have to ask Fannie and Freddie to please leave the taxpayer-financed party. If they don't go, I, for one, say, shoot 'em! (I've probably seen too many mob flicks, I admit.)
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.