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November 30, 2005

Are Fannie & Freddie worsening the debt problem, Wed., Nov. 30, 2005, 2:06 PM

A reader sent along a note re the fact that the U.S. Administration (Office of Federal Housing Enterprise Oversight [OFHEO]), has raised the limits for loans purchased by Government-Sponsored Enterprises, Fannie Mae and Freddie Mac.

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Bill, regarding Fannie Mae and Freddie Mac, the engines of debt creation and growth in the U.S.: in today's Chicago Tribune, it was stated that the two proxies for the Savings & Loan scandals of the 1980's will raise the ceiling for home mortgages with the best rates of interest from $359,650 to $417,000, a 16% increase, starting Jan 1, 2006. Every little bit helps. /Alan"

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My view is that a Republican Administration that gets elected on the desirable platform that government ought to be downsized is often taking steps in reverse.

Mortgage finance today is a very sophisticated market. Is there anything that government can offer that is better for us than say Countrywide Financial Corp (NYSE: CFC)?

I'd prefer to see ten CFC's fighting it out in the marketplace with no Big Brother standing behind Fannie and Freddie. Is there any reason why capitalism can't do the job?

Posted by Posted by Bill Cara on November 30, 2005 02:06:31 PM | Category: 40 Financials

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