Rep. Barney Frank (D-Ma.), chairman of the House Financial Services Committee, said Friday that Fannie Mae and Freddie Mac should be eliminated as they stand now.
“This committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance, that’s the approach rather than the piecemeal one,” Frank said.
Well, the idea that Freddie and Fannies can’t survive is all well and good and may very well be accurate. But do you really think it will help the financial crisis the country is in or help you save your home from foreclosure?
NO WAY!
All it will do is cost more money, more time, and still do nothing to help. I mean look at where the debate on health care is…and where it’s going. This wouldn’t be any better.
Even if they begin discussing how to end Freddie and Fannie, it’ll be years before anything changes because the big lobbying groups and lawyers will get involved and have to throw their two cents worth into the mix.
I’m NOT saying that they shouldn’t try to fix Fannie and Freddie or the rest of the mortgage and securitization mess they’re in. I’m sure some new regulation would help in some situations. Of course, what I think will happen is they’ll over react and tighten the reigns down too far…but that’s a discussion for another day.
What I AM saying is that you should not put any hope in the discussion going on in Congress about disbanding or reorganizing Freddie Mac and Fannie Mae. It’s unlikely to help you for two very simple reasons:
- Unless they grandfather homeowners (which would take years of legal wrangling!), the agreement you have right now wouldn’t change even if Freddie and Fannie go away or change. After all you’re still going to owe someone for your home.
- Congress moves way too slow. Any new laws or organizations would take years to truly be effective at helping people in need…and you probably don’t have that kind of time.
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