A SOLUTION IN SEARCH OF A PROBLEM
Who can support wholesale tinkering with FNMA and Freddie, as a priority?
These organizations have operated for years. Fannie Mae since 1938! If there were some sort of systematic "problem" with them, it might have shown up a lot earlier, no? Which means, on face, we're dealing with an episode.
Has Geithner or any economist associated with the Administration given a clear - and I mean crystal clear - explanation of the failures and their causes at FNMA? (It may have been done. Let me know.)
Ironically the most hapless part of the commissions report is probably the most important. What really went wrong with Fannie and Freddie and how do we fix them?*-link
I submit they have not and they are, therefore, the bunch of them, "a solution in search of a problem". (The lion's share of the problem at FNMA can be summed up in five words, 'the leadership of Daniel Mudd', right? But, I'm still in the process of getting through the massive "dissenting opinions" in the FCIC report, which cover Fannie and Freddie with some elan.)
To start restricting the flow of credit to the housing market, at this time, is tomfoolery.
We have low short-term rates. People should be aggressively refinancing, even into ARMs, so that accommodative monetary policy has its salutary effect.
What's going on instead? They keep changing their underwriting guidelines and making loans more expensive and transitions to new levels of demanded equity instant. How can you take rollover risk, when stuff like that is going on?
In the latest iteration, it appears that the elites there think it is okay to tack a fee onto the highest credit borrowers. Why would you want to risk pricing yourself out of the market for the best credits?
*If that's not a quintessential sign of American decline, that you can't even get an honest appraisal of error and lessons learned, what is?
