Thursday, August 15, 2013

Fannie Mae and Freddy Mac

Econobrowser has some interesting thoughts on Fannie Mae and Freddie Mac. But be sure to read the comments also.

My feeling is that we should return to the fully public Fannie Mae of the past, with as little room for corruption or inflated salaries at the top as possible.  The very purpose of Fannie Mae was to hold risk that private borrowers might not want at low price, to keep only the smallest FHA loans low priced.  Some of that risk is the systemic risk.  The public bank may need to be bailed out during a crisis.  The idea is that fewer other entities would need to be bailed also.  And the public bank could set an example with good rules and boring management receiving comparatively low salaries.

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