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OPINION

End Fannie Mae and Freddie Mac to Build Tomorrow's Housing Finance System

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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The era of Fannie Mae and Freddie Mac is over, and it is time to formally close them down. The activities of the two government-sponsored enterprises (GSEs) played a major role in the 2008 financial crash and have so far cost taxpayers over $150 billion to cover their losses; more is yet to come. Efforts to reform or refine their roles are misguided at best. Nothing short of Fannie Mae and Freddie Mac’s complete elimination will enable a healthy housing market to reappear.

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Today, the two GSEs control about 90 percent of the mortgage-backed securities market, and this must not become a permanent situation. Over time, the private sector is more than capable of taking over their securitization functions without causing major disruptions to the housing market or delaying its recovery. The Obama Administration should propose clear and unambiguous steps that will phase out the role of both organizations in the mortgage finance markets while also gradually selling off their portfolios of mortgage securities.

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