Shutting Down Toxic Mortgage Twins
Winding down Fannie and Freddie Mac.
- Duration 4:22
- Date Feb 24, 2012
Winding down Fannie and Freddie Mac.
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By Mary kissel with -- the -- -- journal editorial board.
And do you think everything we just heard from James Rosen.
Matters or their much bigger problems at that I and I think it's a really really small story in comparison to what's going on in Washington today.
Not just to Fannie Mae and Freddie Mac that with the FHA which is basically the new Fannie Mae and Freddie Mac that congress.
Has been powering.
But -- -- interesting Paper out this week by the same agency James was talking about.
They basically said.
We need to really get rid of Fannie Mae and Freddie Mac to -- an outcome on.
What are you doing and I think it was a really really -- -- Proposition to put out there should be get rid of Fannie and absolutely in you know that the administration itself says we need to get rid of being so I don't.
Well because the White House is of following through on what it promised.
In February of last year treasury Hud and the White House came out and said.
You know what we had his big housing boom and bust and it was mostly due to politicize lending.
And Fannie Mae and Freddie Mac and so it's time to wind them down within five to seven years they put three options out there.
The Republican leadership in congress then went to treasury into -- -- said.
OK guys when are we getting legislative proposals to do this.
They had that meeting and I think may and then later on in the summer they got a phone call from -- secretary Shaun Donovan saying.
Blue skies -- were actually not gonna give you that legislation sorry about that.
So the administration says that it wants to do it but in reality it's not really taking steps forward.
With the political consensus about this topic well the problem is is that there's a political consensus on the Republican side and on the democratic side.
That politicize lending is a very good popular thing to do.
So you might ask will what is the GOP house doing on this subject you think -- -- -- -- -- years would also wanna get rid of Fannie Mae and Freddie Mac and and guess what Eric Cantor house majority leader.
Is the person holding up a series of bills that these very pro reform legislators have put forward and I'll just name a few continue.
-- canceling a Republican from Texas has -- -- to get rid of Fannie and Freddie.
You've got Scott Garrett the New Jersey says.
Let's create a standardized way to have secondary market trading of mortgage backed securities and so these ideas are out there the bills are there.
But on the one hand -- you've got the Republican leadership that isn't doing anything moving Ford.
And on the other hand you have the White House is now and election mode right saying one thing.
And doing another and at the end of the day it's the taxpayer ultimately that's gonna pay.
How months yeah.
That's the million dollar question will you have counted we paid already.
We've already paid a 180 billion dollars us an outlook Fannie and Freddie -- paid you know let's call it -- thirty or forty billion back in terms of dividends to treasury.
So that 180 numbers already inflated but you have to ask how much risk are re racking up in FHA.
-- to give you a sense I think -- liabilities went from about.
Call -- 380 billion dollars maybe five years ago to over a trillion dollars today.
That's a lot of exposure now you know in a private mortgage guaranty company -- hold capital against that exposure.
But FHA isn't doing that -- only has about two billion dollars in reserve.
Against that one point one trillion.
So that's Lehman Brothers -- like 400.
Right now a huge exposure.
And in this Paper that Ed DeMarco who is the regulator on top of Fannie and Freddie came out with.
He's really in charge of Fannie and Freddie he has nothing to do with FHA he's only trying to give congress a nudge in the right direction on.
On but you know a big part of the problem but not the bigger problem that FHA which is still looming out there so there there's an awful lot of risk to taxpayers.
You speak and I just find myself liking class where they're great professor Colin yeah.
Especially hard -- -- understand.
It's complicated and yeah there's a lot of big numbers and infusing numbers and you just broke that down very.
Very appropriately -- and concisely great -- much has such a high paying job well.
A job and another tightening but it's it's always great to be with you on fox thank you so much make his and -- the channel.