Barney Frank: abolish Fannie and Freddie

myp · Jan 24, 2010

Democrat Congressman Barney Frank recently called for an abolition of Fannie Mae and Freddie Mac, the government sponsored mortgage giants. He said that a new approach to housing finance is needed.

link: http://finance.yahoo.com/news/Rep-Frank-Abolish-Fannie-Mae-apf-2556602798.html?x=0

I don't find myself agreeing with Frank very often, but I am right with him when it comes to abolishing Fannie and Freddie. I would love to see them privatized as was done with Sallie Mae, the education loan giant several years ago.

Thoughts?

deanhills · Jan 25, 2010

myp said:
Democrat Congressman Barney Frank recently called for an abolition of Fannie Mae and Freddie Mac, the government sponsored mortgage giants. He said that a new approach to housing finance is needed.

link: http://finance.yahoo.com/news/Rep-Frank-Abolish-Fannie-Mae-apf-2556602798.html?x=0

I don't find myself agreeing with Frank very often, but I am right with him when it comes to abolishing Fannie and Freddie. I would love to see them privatized as was done with Sallie Mae, the education loan giant several years ago.

Thoughts?

Weren't they at the heart of the recent financial disaster? All of it Government backed, and the mortgage invesments approved by Government, and when the failed at the Banks got bailed out by the Government. How do you think it would be privatized?

myp · Jan 25, 2010

deanhills said:
Weren't they at the heart of the recent financial disaster? All of it Government backed, and the mortgage invesments approved by Government, and when the failed at the Banks got bailed out by the Government. How do you think it would be privatized?

Well Frank seems to be suggesting abolishment, but I am not exactly sure what he wants to do with the assets. By privatization I mean prep the GSEs to become private companies and eventually make them separate from government. With all the red on their books it might be difficult, but maybe government could sell any assets investors are interested in and then maybe just eat the cost of the unwanted assets- or wait until they appreciate and sell them later.

Sallie Mae was privatized in 1997 and has experienced good productivity afterwards.

deanhills · Jan 26, 2010

myp said:
Well Frank seems to be suggesting abolishment, but I am not exactly sure what he wants to do with the assets. By privatization I mean prep the GSEs to become private companies and eventually make them separate from government. With all the red on their books it might be difficult, but maybe government could sell any assets investors are interested in and then maybe just eat the cost of the unwanted assets- or wait until they appreciate and sell them later.

Sallie Mae was privatized in 1997 and has experienced good productivity afterwards.

Maybe Frank's suggestion for an abolishment would be the wiser course of action, as that would mean that they would have to work through the assets, one by one, instead of hiding them in paperwork if they should change hands in a semi-Government private sector privatization scheme. Would be nice if they could start those old fashioned building societies that could be operated by local communities, although I'm not sure what the value of the assets would be.

myp · Jan 26, 2010

Well they are already semi-government enterprises- what I am saying is complete privatization. Companies will buy any good assets and the ones that won't sell government can hold on to and sell later or sell at a low value. I am sure that if he is calling for abolishment it either means selling off everything or transferring it to another government program- I don't see any progress in the latter option.

deanhills · Jan 27, 2010

myp said:
Well they are already semi-government enterprises- what I am saying is complete privatization. Companies will buy any good assets and the ones that won't sell government can hold on to and sell later or sell at a low value. I am sure that if he is calling for abolishment it either means selling off everything or transferring it to another government program- I don't see any progress in the latter option.

At least with abolishment there would be an absolute clean and neat ending, and a foundation for a new beginning. Going the privatization route would probably be something that would never have an ending. Government may also create something really bad out of it as they always tend to mess things up.

Barney Frank: abolish Fannie and Freddie

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