McCain to Fannie Mae: Go Away

From
The Wall Street Journal:

In the rush to bulldoze the Fannie Mae-Freddie Mac and housing bailout bill
through Congress this week, scant attention has been paid in Washington to how
the U.S. system fell into this hole. Thus it was refreshing to see Senator John
McCain step up and speak rude truth to his colleagues about the fiasco in an
op-ed piece this week.

"Americans should be outraged at the latest sweetheart deal in
Washington," the Republican presidential hopeful wrote in the St. Petersburg Times, stating
the clear but all-too-often unspoken reality about this greatest of
boondoggles...

Senator McCain, who wasn't present for the cloture vote, also called for an
end to their multimillion-dollar lobbying campaign. More importantly, he called
for "making them [Fannie and Freddie] go away," as in, be no more. Receivership
may indeed by the only option if a regulator can't get the far-flung activities
of these two under control.

Even if these quasi-socialist entities are brought under control and stabilized, they should be broken up and completely privatized. These two corporations were created at times when the private secondary market was virtually non-existent. That's no longer the case and their mere existence as private profit, public risk ventures distorts the mortgage market and encourages the type of behavior one would expect when someone else pays the consequences for their bad decisions. Additionally, Fannie and Freddie's operations are heavily influenced by the political considerations of congress that prompt them to adopt imprudent policies no truly private company would ever consider.

Many are saying that without Fanny and Freddie, the mortgage and Real Estate markets would have collapsed had they not been there as a backstop, without considering that private markets would have been more conservative had they not been there in the first place. On a basic level, the Federal Government has no moral or constitutional right to be in the mortgage business in the anyway. This disaster proves that it's high time they got the hell out and take taxpayers off the hook.