Abolish Fannie Mae and Freddie Mac; we can't afford them

The Obama administration held yet another style over substance “conference” yesterday, this time to give the appearance of doing something about housing giants Fannie Mae and Freddie Mac. The two behemoth government sponsored enterprises (GSEs) are at the epicenter of America’s financial meltdown.

The two GSEs have further placed taxpayers on the hook for nearly $5 trillion in mortgage guarantees and debt obligations.

And Fannie and Freddie continue to bleed money at an alarming rate.

In early August they requested over $3 billion in additional bailout funds. To date, America’s taxpayers have shelled out a whopping $148.2 billion bailing out the two failed government mortgage enterprises. The Congressional Budget Office (CBO) estimates the bailout could reach as high as $389 billion.

“With the national debt at nearly $14 trillion and unemployment still near 10 percent, the administration has yet to stop the bailouts of Fannie Mae and Freddie Mac,” said House Republican Conference Chairman Mike Pence (R-Ind.). “They would do well to remember that underwriting every bad loan in America is not the answer.”

My take:

It's hand-wringing time again concerning the future of Fannie Mae and Freddie Mac, which, unfortunately for American taxpayers, may actually have a future.

But it's election season, so posturing is in order. A couple of days ago, Barney Frank even suggested that maybe, perhaps, eventually, Fannie and Freddie should be "abolished," a suggestion that has been made here without conditions.

Fannie and Freddie served as consigliere in the subprime housing bubble and bust. Without Fannie and Freddie, neither of those disasters could have happened.

Since the bubble and bust did happen, the rational course would be to abolish Fannie and Freddie, since that would prevent a repeat of the subprime mess.

Trouble is, this is election season, and Fannie and Freddie have served as generous supporters of Democrat congressional campaigns. They also have served as hiring halls for out-of-work Democrats, no small consideration given the likelyhood that the Democrat unemployment rate will rise after the November election.

So why don't Republicans make the extinction of Fannie and Freddie an election issue?

Call Barney Frank's bluff.

Shrink government.