The GSEs, Their Bailout, and How Joe Sixpack Continues to Pay for It

When the average taxpayer hears that Uncle Sam has provided $170 billion of their money to bail out the GSEs they get outraged. (Okay, some of that money has gone right back into the government's pocket via dividend payments from Fannie Mae and Freddie Mac.) But how do you explain to the man-on-the-street that without the GSEs the housing and mortgage markets would collapse? My firm belief is that you can't touch the GSE structure until housing values begin appreciating once again -- by a lot. Anyway, I'm sure that Joe Sixpack won't be reading news stories about Edward DeMarco's testimony this morning and perhaps that's a good thing because FHFA's DeMarco not only noted that guarantee fees have been hiked -- but that they will be hiked even more in the months ahead. Joe Sixpack doesn't know what a guarantee fee is -- but everyone in mortgage banking does. And everyone in mortgage banking also knows that all g-fee hikes are passed onto Joe Sixpack.