A horrible idea

Friday, June 10, 2016

The current plan is to return the two mortgage-finance giants, Fannie Mae and Freddie Mac, to their pre-financial-crisis status as privately owned but "government-sponsored" enterprises.

Wall Street hedge funds scooped up Fannie and Freddie's beaten-down common stock for pennies a share after the bailout -- and they would realize massive profits if the government decided to let shareholders have access to company profits.

A bill proposed by Rep. Mick Mulvaney (R-S.C.) would set Fannie and Freddie, unreformed, loose on the marketplace again and do so under terms wildly favorable to the hedge funds. This is a horrible idea on top of an already terrible policy.