by Sam Hieb
The huge profits rolling in at Fannie, and at its corporate sibling Freddie Mac, reflect the enormous role the government is playing in the housing market nearly five years after the crisis. As a result, the earnings will intensify the debate over the amount of involvement that government should have in housing.
“This should change the dialogue of what we want to do with the companies,” said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication.
…. “I’m glad Fannie Mae is showing an increase in income, but we have to remember that this is largely because we have crowded out private capital and made Fannie or Freddie the only viable execution option for new loans,” Senator Bob Corker, Republican of Tennessee, said in a statement.
In case you missed the news last month, President Obama is considering Rep. Mel Watt to head Fannie and Freddie. Somehow I don’t think Rep. Watt –who voted against a bill that would have cut executive salaries at Fannie and Freddie — will do much to change that dialogue.