Fannie, Freddie to face fire at Tuesday’s Treasury conference

Jul 2011
EXCLUSIVE – House Republicans plan to use Tuesday’s Treasury-HUD “Conference on the Future of Housing Finance” to call for the GSEs’ abolition and to criticize Democrats for not tackling Fannie and Freddie in Wall Street reform. Rep. Mike Pence (R-Ind.), chairman of the House Republican Conference, last night sent his members a “Policy Brief” aggressive titled, “With Fannie and Freddie, Hearts Change as the Political Winds Blow”: “REPUBLICAN SOLUTIONS -- Taxpayer Protection: … The Republican plan would end the model that allows privatized profits and socialized losses by phasing out the GSE charter. … Restoring Market Discipline … Encourage Innovation and Choices for Consumers.”

-- FIREWORKS: Treasury spiced up the conference by inviting AEI resident fellow Alan J. Pollock, president and chief executive officer of the Federal Home Loan Bank of Chicago from 1991 to 2004, as a panelist. To get a flavor for his planned remarks, here’s the questionnaire he returned to Treasury: “There may, decades ago, have been a case for GSEs (Fannie Mae and Freddie Mac) … This duopoly element of the old housing finance system should not survive.”

--JAMES RICKARDS op-ed in today’s FT, “Fannie and Freddie’s bond market upheaval”: “Today their stock trades at a steep discount, but it still trades. Those who held their debt took no haircut at all. Their assets were never fairly revalued and the balance sheet was replenished with taxpayer funds. … The longer policy distorts markets by ignoring fundamentals, the longer those reliant on market signals will sit on their hands. The Fed’s recent decision to continue asset purchases shows there is no exit once this path is chosen. As we approach the second anniversary of the Fannie and Freddie bailouts, are we better off? Values cannot recover until they first hit bottom. In short, our economies would be growing more robustly today if we had taken our medicine in 2009.” The writer is a writer, economist, lawyer and investment advisor.
POLITICO Morning Money -
Getting rid of these two GSE money pits should have been done three years ago.