Break Up Fannie and Freddie

Steve Forbes calls for exactly what a lot of us have been saying for a while now.

The Bush Administration should vigorously push to have Fannie Mae (nyse: FNM
- news - people ) and Freddie Mac (nyse: FRE
- news - people ) recapitalized and broken up into 10 to 12 new companies, with their ties
to the government completely severed. Yes, this would mean Uncle Sam pumping in
some $300 billion in equity capital, and perhaps taking on some $100 billion in
those questionable mortgages. But such an investment would enable these
companies to have a sound debt-to-equity ratio in the vicinity of 4-to-1.

But it gets little or no attention because these entities have become a corrupt, taxpayer guaranteed cesspool of graft and congress has no interest in turning off the money and influence spigot.

We believe in the right of individuals and businesses to lobby Congress.
But with Fan and Fred now explicitly guaranteed by taxpayers, letting them ladle
cash all over Washington amounts to using government-guaranteed profits to lobby
for continued government protection. Congress sets the rules in favor of Fan and
Fred, which then repay the Members with cash from their rigged profit stream.
This is the government lobbying itself for more government.