Posted by Damozel | So we're waiting to find out what the government has in store for Freddie Mac and Fannie Mae. Neither of our two presidential candidates have been inclined to speak kindly of the two loan giants.
Obama derided Fannie and Freddie as a “weird blend,” advocating that “If these are public entities, then they’ve got to get out of the profit-making business, and if they’re private entities, then we don’t bail them out.” He said later that he has “no sympathy” for the CEOs of Fannie and Freddie, and that the government shouldn’t bail out “investors who had made a killing.”(WSJ)
Obama also "blasted" the Bush administration for failing to heed the signs, according to The L.A. Times:
"We have to make clear that in our market system, investors can't be allowed to believe that, unlike working families, they can simply invest in a heads-they-win, tails-they-don't situation," the Illinois senator told reporters while campaigning in Indiana.
He said that some of the companies' problems resulted not from the housing market plunge but from executives' irresponsibility."Management was not making decisions that were designed to help them meet what should have been the mission, which is simply to provide liquidity in the housing market," he said. "They were boosting profits as a priority, with the management bonuses that came with those profits." (LAT)
Obama says that Fannie Mae and Freddie Mac are "so tied into the housing market" that we probably do have to save them from collapse. (HuffPost)
As for McCain, he has promised to "crusade" to reform Fannie and Freddie:
McCain, similarly, railed in an editorial that “if elected, I’ll continue my crusade for the right reform of the institutions: making them go away. I will get real regulation that limits their ability to borrow, shrinks their size until they are no longer a threat to our economy, and privatizes and eliminates their links to the government.” McCain attributed the growth of the agencies to “crony capitalism,” and Washington selling out to Wall Street. (WSJ)
At a rally in Colorado Springs, Col., Republican vice presidential nominee Sarah Palin said, "They've gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help." (HuffPost)
I don't know what that means except "refer to McCain's editorial cited above." The folks at The Wonk Room aren't impressed by the Republicans' ideas to fix the housing crisis problem because---or so they suggest---McCain hasn't got any.
John McCain’s plan for solving the housing crisis consists of “policy platitudes instead of solutions.”
McCain, like President George Bush, advocates a laissez faire approach to housing, and has said that he would only “convene a meeting of the nation’s accounting professionals” and “top mortgage lenders,” who he hopes would voluntarily help Americans.
However, as the Wonk Room has pointed out before, “individual and voluntary negotiations between at-risk borrowers and mortgage servicers is clearly not working.” Instead, “effective solutions for foreclosed properties must be centered on state and local governments and their non-profit, private sector, and philanthropic partners.”
The Wall Street Journal calls McCain's and Obama's convictions that Fannie and Freddie need restructuring "a good sign."
It indicates that change is afoot and that the market may not have to hold its breath in the future while worrying about the fate of the two government-supported agencies, which are exposed to about $5 trillion in debt (WSJ)
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