Incoming GOP May Flake on Fannie and Freddie

Kevin Glass
Posted: Dec 29, 2010 5:36 PM
Republicans have been promising that Fannie Mae and Freddie Mac, the two government-sponsored enterprises that engaged in reckless subprime lending in the run up to the mortgage crisis, would be wound down and privatized. The Wall Street Journal reports, however, that this may take longer than expected.

Earlier this year, leading House Republicans proposed privatizing mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) or placing them in receivership starting in two years.

Now, as Republicans prepare to assume control of the House next week, they are offering a more nuanced message: Any retreat of government support in the housing market should be gradual.

While it's true that a privatization policy would be more complicated than campaign rhetoric, this is hopefully an issue on which the incoming GOP should not compromise. They correctly opposed the GSE-sponsoring policies of Barney Frank and company, and should do the right thing to wind down the publicly-backed home loan giants.