No fix of the mortgage financing system

August 23, 2013

It has been years since bad lending and bad mortgages conspired with Wall Street stupidity to crash the American financial system. But amazingly, no fix of the mortgage financing system has been forthcoming, or even proposed.

Now President Obama is taking on the mortgage-finance morass. …

Obama wants gradually to shut down Fannie Mae and Freddie Mac, the two government lending programs. He says taxpayers should never again be left “holding the bag” for their costs. More fundamentally, he says most mortgage lending should come from private lenders. That’s an old-school GOP position.

The president also wants the federal government to insure private loans and regulate home loans. These are classically Democratic positions.

Competing versions of reform legislation are before Congress. One would simply abolish Fannie Mae and Freddie Mac. The other would do what the president wants to do — dismantle them and replace them with regulation that includes both carrots and sticks. …

Reform should get government out of home loans, not retain it as the man behind the curtain. The feds should regulate, but not try to control outcomes. …

President Obama is right to try to move lending back to a marketplace that has rules, but is essentially private.

— The (Toledo) Blade