Bob Barr Says Privatize Fannie Mae & Freddie Mac
Wednesday, July 16, 2008
Bob Barr isn't talking about bailing out bad decisions, like some other candidates are. He's talking about ending a disaster:
Oklahoma City, OK -- The latest financial crisis involving Fannie Mae and Freddie Mac, which guarantee home mortgages, demonstrates yet again how government intervention in private markets almost always comes to grief. Both Fannie Mae and Freddie Mac are nominally private, but were created by Congress and enjoy significant advantages over truly private companies, including cheaper borrowing, lower capital requirements, and an implicit federal guarantee.Link to Barr's full statement on Fannie Mae & Freddie Mac.
As a result, the two organizations behaved irresponsibly, confident that they were “too big to fail.” They own $5.1 trillion in mortgage debt, almost half of the nation’s total. With the sub-prime lending crisis in full swing, their losses are up, their capital is down, and their ability to borrow is falling. Immediate privatization is difficult because the markets doubt the organizations can survive without government support. Insolvency and a forced asset sale would roil both the housing and financial
These problems are almost entirely the fault of the federal government. Congress created programs to artificially inflate the housing market, established Fannie Mae and Freddie Mac to be exempt from normal scrutiny, oversight, and competition, and expanded their activities in response to the sub-prime lending meltdown. Government must get out of the mortgage business, but must do so in a way that least harms taxpayers and the economy.
Update: McCain & Obama campaigns have ties to Fannie Mae & freddie Mac. That could explain their interest in bailouts.
posted by Mike Kole @ 9:42 PM,