Should Fannie Mae and Freddie Mac be Given a Second Chance?

NOV 8, 2012 12:27pm ET
Comments (3)

One industry partisan that I know recently predicted that Fannie Mae and Freddie Mac very likely will earn at least $20 billion each year (combined) for as far as the eye can see. In other words: the ‘bad old days’ are a thing of the past for the two. Unfortunately, the carnage caused by the GSEs buying crappy loans has blown a $100 billion hole in the U.S. Treasury. But at $20 billion a year the debt can be repaid in five years. Here’s something to think about: should they be given a second chance – but with strict limitations on what they can do? Something to think about…

Comments (3)
Of course they should! They have been around for quite some time. They had a great deal of assistance in getting where they are today. We can not place all the blame on them. We know many others played a role. Fix what is broken and let them help pay for the dept they caused while helping us to pull out of this recession. We need sustained housing growth to be able to cure the illness and to keep us healthy!
Posted by ROBERT R | Thursday, November 08 2012 at 1:40PM ET
When American gets back on track, they will be a cash machine. The question is, do we want to completely privatize them OR continue as Government Entities? They never were without government backing. I think they should remain on A Paper liquid loans, and let the private market come back for Jumbo and Subprime. The problem was when subprime \ ALT-A loans were being sold to FNMA \ FHLMC, at the same rate as Prime loans, there was no risk penalty, so everyone took a risk at the same time and we all lost out.
Posted by | Thursday, November 08 2012 at 6:57PM ET
I agree with Robert. Organizations don't commit crimes, individuals commit crimes. In addition to the leadership of the organization the quality and performance of originations should be tracked by the individual loan officer, processor, & underwiter. If loan performance is substandard and a pattern of failing to adhere to quidelines and best practices or fraud is evident the individual and in some instances the leadership of the organization should suffer the consequence of being banned from the industry.
Posted by Ted C | Thursday, November 08 2012 at 7:12PM ET
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