Congress Won't Reform GSE's
Leave it to the Congressional Budget Office to tell congress the short route to fix the GSE's is to eliminate the subsidy. "CBO Director Douglas Holtz-Eakin, said the housing market no longer needs the parts of U.S. law governing Fannie and Freddie that Wall Street interprets as a federal guarantee of the companies' obligations."
"Therefore, those entities could gradually be relieved of the responsibilities and benefits of their current status as GSE's and required to operate as fully private organizations, which would reduce their risks and costs to the federal government."
Sounds perfectly reasonable to me. But hear the horror from the so-called reformers. "'I'm not pushing for the total privatization of the GSEs,' said Alabama Republican Sen. Richard Shelby, chairman of the Senate Banking Committee. 'The GSEs play a critical role in the housing market.'"
OK, Mr. Shelby, I have a long memory and when this thing goes sideways, you will be reminded that the US could have escaped billions, maybe trillions in liability.