The 'Super Committee' Deadlock, and What it Means for the GSEs

The 12-member bipartisan panel – aka the 'Supercommittee' – created in August to defuse a political standoff over raising the federal borrowing limit can't reach a deal to save $1.2 trillion in federal spending. The deadline of Nov. 23 is fast approaching. This is what happens when you have a severely divided government and two political parties with a declining number of moderates who are willing to compromise. As for what a “no deal” finale will mean for housing, it's unclear. But rest assured, the inability of this Congress to compromise on just about anything – unless faced with a crisis – does not portend well for the future of Fannie Mae and Freddie Mac. The only thing Congress can agree on regarding the two GSEs is to reduce the salary and bonuses of the people running these essential secondary market organizations. At Thanksgiving our elected officials can go home and brag, “Look what I did to those big bad GSEs who caused the financial crisis.” Of course anyone who believes Fannie and Freddie caused the crisis is an ignoramus. (Yes, they played a role but the true blame is on Wall Street.) Anyway, Joe and Mary Sixpback might thank their Congressman for righting a GSE wrong while asking, “Now is there anything you can do, Congressman, to get me a loan?”