Fannie Mae and Freddie Mac

A good look at these two at the New York Times:

Housing Policy�s Third Rail
While Congress toiled on the financial overhaul last spring, precious little was said about Fannie Mae and Freddie Mac, the mortgage finance companies that collapsed spectacularly two years ago.

Indeed, these wards of the state got just two mentions in the 1,500-page law known as Dodd-Frank: first, when it ordered the Treasury to produce a study on ending the taxpayer-owned status of the companies and, second, in a �sense of the Congress� passage stating that efforts to improve the nation�s mortgage credit system �would be incomplete without enactment of meaningful structural reforms� of Fannie and Freddie.

No kidding.

The author, Gretchen Morgenson, notes:

But attaining genuine remedies for our housing finance system could actually be harder than rocket science. That�s because it would require an honest dialogue about the role the federal government should play in housing. It also requires a candid conversation about whether promoting homeownership through tax policy and other federal efforts remains a good idea, given the economic disaster we�ve just lived through.

Alas, honest dialogues on third-rail topics like housing have proved to be a bridge too far for many in Washington. So, what we may hear instead about Fannie and Freddie before the elections is a lot of sound and fury signifying a stealthy return to the status quo.

This would be unfortunate, not only because the financial crisis presents a rare opportunity to reassess the supposed benefits of homeownership but also because there was a lot not to like about the way these companies operated and the ways their friends in Congress enabled that behavior.

There is a lot of swampland in Washington that needs to be drained and exposed to the strong light of day. As Gretchen said, this would have been a perfect time to reform the housing market and this governments involvement but no... Nobody in Washington has the clout or political vision to implement a true recovery.