bipartisan panel to recommend Fannie and Freddie be replaced

[oragator1]

A bipartisan panel including former secretaries of the Department of Housing and Urban Development and retired U.S. senators is preparing to release a proposal for scaling back the government role in mortgage finance that would put taxpayer dollars at risk primarily under catastrophic circumstances.
The blueprint, which the Washington-based Bipartisan Policy Center is scheduled to release Feb. 25, is an attempt to jump- start the stalled debate over shrinking the government role in the $9.5 trillion mortgage market, according to three people familiar with the plan. The document was drafted over the past 16 months by a 21-member commission including industry representatives, consumer advocates, and former policy makers.
Enlarge image
The new entity could replace Fannie Mae and Freddie Mac, which were publicly traded companies with no explicit government backing before they were seized in 2008 after investments in risky loans pushed them to the brink of insolvency. Photographer: Andrew Harrer/Bloomberg
The panel will recommend that the U.S. replace Fannie Mae and Freddie Mac, which package loans into securities with guaranteed interest and principal payments, with mortgage-bond guarantees that kick in only after private firms take the initial losses, according to the people, who asked not to be identified because the report isn’t yet published.

http://www.bloomberg.com/news/2013-0...s-support.html

[chemgator]

I'm surprised that these two incompetent organizations have been kept around this long. I don't think they should be replaced--they should be terminated. Let banks do the banking, and keep the gov't out of it as much as possible.

[G8trGr8t]

Recently refinanced with Wells Fargo. Their appraisers are not allowed to use fanniefreddie loans as comparables. Found that interesting as the highest prices per SF in my neighborhood were all FF loans. Bawney Fwank will be along any day now to join pelousy in defending FF

[channingcrowderhungry]

Originally Posted by chemgator

I'm surprised that these two incompetent organizations have been kept around this long. I don't think they should be replaced--they should be terminated. Let banks do the banking, and keep the gov't out of it as much as possible.

You forgot about the part where when we let banks do the banking, if they make poor decisions we have to let them fail.

[chemgator]

Originally Posted by channingcrowderhungry

You forgot about the part where when we let banks do the banking, if they make poor decisions we have to let them fail.

There were moderately successful banking regulations prior to the repeal of Glass-Steagal. I think that you have to let the banks fail, while protecting the depositors to some extent. I don't think FDIC should pay 100% on every dollar up to $250k if a bank collapses--it should be more like 50%. Set limits on how much compensation a bank executive can make if his bank fails, going back 3-4 years so an executive can't rob a bank into failure. Have honest ratings on the financial condition of the bank, published routinely.

Accountability would be a good thing for banks. It would make them more focused on making good loans and less likely to fail in the first place.