In the run-up to the financial crisis, Fannie and Freddie made mistakes. They followed Wall Street investors into securities backed by high-risk mortgages. The results were disastrous. But that failure was an anomaly for two institutions that have played a life-changing and mostly invisible role for millions of homeowners. Fannie has been helping Americans buy homes since 1933; Freddie since 1970. Without them, millions of homeowners would not have been able to get their mortgages.
Now that they are stable, profitable and, like banks, better regulated, it’s time for the government to get out of those businesses.
The issues are complex, but the big-picture goal is not: ensure the flow of affordable mortgages to the working class. The GSEs, which are now healthy and profitable, are uniquely focused on that task, and they are too important to be eliminated or broken up into pieces.
The dream of homeownership remains out of reach for too many households. Releasing Fannie and Freddie from federal control is an essential part of restoring it.
It’s time to end the conservatorships of Fannie Mae and Freddie Mac.
Click here for John Taylor’s full oped in American Banker’s BankThink.
Photo by Blake Wheeler on Unsplash
