Don’t Pay It

The Federal National Mortgage Association, Fannie Mae, the government-run (never mind that it’s supposedly only government-sponsored, it began life as a government agency, it was set out on its own and failed, and now it’s under Federal Housing Finance Agency management regulation) mortgage securitizor, is failing again.  And now this agency wants a taxpayer bailout.

Fannie said Wednesday its regulator, the Federal Housing Finance Agency, would seek a fresh taxpayer infusion of $3.7 billion from the Treasury Department as a result of the loss [of $6.5 billion in the last quarter alone]….

It also would be, if this taxpayer bailout goes through, the second one for this agency just since the Panic of 2008.

The thing has, in fact, been paying dividends to the Treasury, but it’s time to stop feeding it.  It isn’t necessary; if the free market wants securitized mortgages to facilitate mortgage lending, private enterprise securitizers will appear—just look at all the securitizers of other kinds of loans and other methods of securitization that have already appeared.  Treasury will more than make up for the lack of Fannie Mae dividends from the tax revenue accruing from a more dynamic free market.

Fannie Mae and its brother, Federal Home Loan Mortgage Corporation (Freddie Mac), just distort the lending market.

The agency needs the infusion?  No, it doesn’t.  It needs to go away.  Along with Freddie Mac.

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