I got all excited when I read this morning’s headline to the effect that Barney Frank would recommend replacing Fannie Mae and Freddie Mac. (Bloomberg January 22nd article here.) Recall that Barney was the Democrat arguing to “roll the dice” with Fannie and its foray into subprime loans. As it turned out this gambling with your tax money was a proximate cause of the financial debacle we are still feeling the effects of.
Well my excitement lasted about a nanosecond. “We’re going to look at the whole question of housing finance…sorting our the function of promoting liquidity in the market and also the secondary market in general but then also doing some kind of subsidy for affordability.” Frank continued, “I don’t know anybody who thinks Fannie and Freddie should continue!”
In other words we’re going to create a whole new government home finance scheme! To bring Fannie and Freddie “on budget” following the recent $291 Billion Fannie-Freddie bailout would cost another $99 Billion according to the CBO. Looks like our $1.4 Trillion 2009 deficit will only go up! A federal debt increase follows as sure as night follows day! (WSJ January 22nd article here.)
When will these socialists learn that government has no role in housing finance? This is not a proper function of government. The market can best handle capital allocation decisions, including home financing. The government has proven it can’t handle them, over and over again. Our children and grandchildren will suffer as a result!
Tom Motherway