Let’s just say that when Fannie and Freddie were accepted as profit makers they became part of the corruption machine. The general idea was admirable. But allowing Wall Street and interest rates to dominate the gov’t funded system was a mistake. Just like allowing politicians to be funded by the same corrupt system.
DeMarco shares his thoughts in an opinion piece in theWall Street Journal entitled “Put Fannie and Freddie Out of Taxpayers’ Misery.”
Here’s DeMarco, in his own words:
Seven years later, fundamental problems with the system—especially the roles of Fannie Mae and Freddie Mac—remain unreformed. If today’s presidential candidates want to engage in a policy debate that affects the lives of nearly all Americans, this is it.
The good news is that broad consensus exists on two core changes that could be implemented now:
First, taxpayers shouldn’t be left holding the bag for mortgage defaults. Instead, private capital needs to be brought back into this system. In 2013 the Federal Housing Finance Agency (FHFA) began the process of shifting mortgage credit risk from taxpayers to private markets. The agency directed Fannie and Freddie to sell some portion of the mortgage credit risk they assume when they issue mortgage-backed securities.
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