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The conservatorship has largely worked. Fannie and Freddie unwound much of their nonperforming assets through a variety of programs created by their conservator, the Federal Housing Finance Agency. The failed institutions are turning a profit and paying back the money provided by taxpayers to keep Fannie and Freddie from going under in 2008. As important, Congress has begun the serious work of replacing the flawed model that nearly brought down the entire U.S. economy.
While the House, Senate and Obama administration may differ on some elements of housing reform, all three seem to be consistent in two areas. First, more private capital must be injected into the housing market to reduce the government role. Second, Fannie and Freddie must go, and the housing financing system must be reformed. The strategy Fannie and Freddie’s shareholders intend to employ to effectuate their heist of taxpayer dollars is to blow up housing reform in Congress and preserve Fannie and Freddie. This would allow them to recoup their investment and leave taxpayers and homeowners in peril.
At least the position of the preferred shareholders is consistent with the prevalent attitude surrounding the housing crisis since the bubble burst: only taxpayers and homeowners should lose money. Apparently the ideals of free market capitalism, under which money is gained and lost, are suitable for everyone except for these specific shareholders. When their money is lost, free market capitalism is replaced with a series of unfounded and hysterical claims that the world will end if they are not made whole courtesy of the American taxpayer.
Congress should not allow the shareholders to hijack housing reform and send a reform package that liquidates Fannie and Freddie to the president’s desk in 2014.
Scott Whaley is the 2014 president of the National Real Estate Investors Association.