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Investments / The Ticker

FT: It's time to abolish Fannie, Freddie

Freddie Mac
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The editorial board at the Financial Times isn't dancing around the issue -- the paper thinks that Fannie Mae and Freddie Mac aren't due for reform. The paper says far better for the GSEs to be eliminated altogether, and that anything less than the full Monty would be a mistake:

Yet the bigger the US government’s exposure to the housing market the more difficult it will be to wind down Fannie and Freddie. Reforming, rather than abolishing, them would be a mistake. Among the plans in circulation is a bill that would replace the GSEs with a smaller agency that would guarantee mortgage lenders against “catastrophic loss” defined as 10 per cent of principal.

The rest of the op-ed is worth a read, if only to get a read on how others view the U.S. system of housing finance.

Source: Financial Times
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