From this morning’s Realty Times
Washington Report: Fannie and Freddie
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A major financial industry trade group got Washington’s attention last week when it called for the total elimination of Fannie Mae and Freddie Mac — the giant, money-losing home loan companies now under federal control.
Last year Paulson and his boss blew up a system that got World investors to finance some 70% of US home sales at near Treasury rates without direct federal subsidies.
Now that Fannie/Freddie are gone the Mortgage Bankers Association is desperate to put taxpayers on the hook for 8 million home sales a year because the World’s investors no longer trust our real estate pros to come clean on the real risk of the mortgages they sell. That's why the MBA is panicking and screaming for the taxpayers to give banks the power to slap federal guarantees on nearly any mortgage they want. The MBA says it will be safe because it will be regulated. We know what that means; it means the banks will earn the profits, the taxpayers will eats the losses.