Fannie and Freddie are failed experiments in social policy. Their government charters allowed them to borrow for less than other companies, which gave them easy money and easy profits. And their odd status as government-chartered entities that were also publicly traded corporations set them up to profit by putting taxpayers at risk.
The Treasury Department presented three options. The first would simply wind down Fannie and Freddie as the housing market recovers, leaving nothing in their place. The second would create a government agency that would lend during crises when private credit died up. The third would put government in the reinsurance business, selling policies that would guarantee mortgages in case a primary guarantor from the private sector foundered.
[i]The Treasury Department presented three options.[/i]
And all three options include the Government. Gee, haven’t we learned the lesson here yet??????????