Oh, the Ironies of a Government Shutdown: FHA and the GSEs

There’s a few things we know about Republicans and Democrats. Most members of the GOP would love to dismantle Fannie Mae and Freddie Mac as soon as possible even though both are now reporting operating profits. (Of course that profit applies to 4Q. First quarter 2011 earnings will be out in about five weeks.) Democrats are none too fond of the GSEs too, but are willing to take more of a ‘let’s wait and see approach’ to pulling the plug. Meanwhile if the government shuts down, that means the Federal Housing Administration will stop insuring new loans. FHA has a 30% market share. Will all FHA’s business migrate over to the GSEs? Some of it could, adding to their profitability. And while we’re on the subject of profitability, check out the National Mortgage News website today. According to one of our stories, FHA is on track to earn $10 billion (yes, that’s BILLION) this fiscal year on its guarantee business. Is socialism a great thing or what? I guess FM Watch got what it wanted…