Improper accounting for Fannie Mae’s and Freddie Mac’s budgetary impact has created the illusory effect that the government-sponsored enterprises (GSEs) represent a free lunch for Washington, which is encouraging higher spending and harming efforts to eliminate the entities.
The Johnson–Crapo bill would only protect investors and special interests at taxpayers’ expense.
The approach being taken in the Senate would ensure that U.S. mortgage markets are slightly remodeled rather than completely reformed.
The legal claims against Fannie and Freddie are not without merit, but they should not impede needed efforts to dissolve the GSEs.
The 30-year FRM is now the dominant mortgage product in the U.S., but it did not become so pervasive simply because of the GSEs.
Housing finance reform will be successful only if policymakers embrace the basic principles inherent in a free market.