Ed Feulner

Rather than write far-reaching bills, lawmakers should reform the agencies most responsible for the 2008 meltdown: such as government-backed mortgage giants Fannie Mae and Freddie Mac.

So far, taxpayers have poured $125 billion into them. On Christmas Eve, the Obama administration gave the pair an expensive gift at taxpayer expense, promising to provide unlimited financial assistance.

Thus emboldened, Fannie and Freddie continue to back the vast majority of new mortgages. The Washington Post reports they “now own or back more than half of all U.S. home loans.” It’s just this type of over-concentration that caused the financial crisis in the first place.

There are problems in the markets. Banks are reluctant to lend and individuals are nervous about investing, for example. But a key reason is uncertainly over what Congress will do.

Many lawmakers want to pass a massive health care reform bill that would legislate mandates and impose new taxes. Last year the House passed a cap-and-trade scheme that would increase expenses for most businesses. Nobody can be sure what financial regulation will look like in a year, let alone a decade.

Instead of pursuing sweeping reforms that could end up causing problems instead of solving them, Congress should deal with the real threats to our economy. Fannie Mae and Freddie Mac could still drag us down, just as stringent over-regulation could.

Lawmakers should deal with the problems they’ve helped create, rather than rush to create new ones.

Ed Feulner

Dr. Edwin Feulner is Founder of The Heritage Foundation, a Townhall.com Gold Partner, and co-author of Getting America Right: The True Conservative Values Our Nation Needs Today .
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