There’s more than one scary Freddie:
Let us not forget how the housing crisis happened. Heritage has four must-read bullet points that everyone should know. Number four is especially important to remember, particularly if you are arguing with the “help the poor” left.
Under the guise of helping low-income homeowners, Fannie and Freddie’s shareholders have received billions in annual subsidies. The truth is that these companies were designed to help private investors at the expense of U.S. taxpayers. Shareholders received all the profits from government-backed securities while taxpayers were forced to share the risk.
That’s right, these were set up so Wall Street could party while Main Street takes a bath. And then what happened? Everybody lost. Especially taxpayers.
But it’s not just because American taxpayers are on the hook. It’s also because Fannie and Freddie drive up the cost of home ownership and inflate interest rates. Easy to get in to a house, hard to get back out. This is directly sticking it to middle class; working class people who want nothing more than the American dream of owning a home.
Heritage suggests an inoculation against further disruption and debt by government-sponsored mortgage enterprises, or GSEs:
Private companies have expressed a willingness to take over the GSEs’ mortgage insurance function; Congress should let them do so.
The time is drawing near. In Congress, Senators Crapo and Johnson currently have a draft of a GSE bill that is still being worked through.