Succumbing to the home loan ‘crisis’ they (and poorly-educated home buyers) created, the federal government has seized control of the Federal National Mortgage Association (’Fannie Mae’) and the Federal Home Loan Mortgage Corporation (’Freddie Mac’).
I’ve written a bit about this before and my general disdain toward hybrid public/private organizations. Trying to conglomerate public and private goals never works well for anybody—if you need proof look at Amtrak, the Postal Service, the DC-area Metro transit system, or any public university. Hybrid organizations were intended to combine the best features of government with the best features of private industry; instead, they usually combine the worst.
All-in-all, since Fannie Mae and Freddie Mac are essentially banks, it makes sense for the government to seize control as they teeter on the brink of insolvency. After the great depression, the government is well equipped to take over failing banks. The big test is what they do next, and I certainly hope they don’t nationalize our mortgage system. The government, I’m sure, could mess this whole thing up even worse than the hybrids did.
The only logical solution is privitization. The discredited hulks of Fannie Mae and Freddie Mac should be sold as quickly as possible to the highest private bidder. I have no doubt that some enterprising corporation out there would be able to steer one or both of these ill-fated hybrids to private-sector profitability if given the opportunity.