Real companies take real risks and add value. A company that relies entirely on the government’s guarantee of its product (government-guaranteed mortgages) is not a true private company. FNMA is just a socialist abortion that needs to die.
All of the Fed bond-buying has just been a backdoor bailout and recapitalization of the banks. Yes, it's a form of socialism or crony capitalism, whatever you want to call it. The insolvent, too big to fail banks should have been allowed to fail, with any remaining assets rolled into a single entity for eventual sale to the highest bidder, just like the Resolution Trust Corporation did after the S&L debacle in the late eighties. We had a template for how to do this, but Wall Street is much more powerful and connected now than it was in the late eighties.
The problem is: 1) You're wrong. It's profitable, only INSURED by the govt. 2) Privately secured companies are not going to want to finance 30yr terms. 3) If 30yr terms become a thing of the past, it will greatly affect the housing market. Fewer people will be able to buy. Interest will be higher. It will do some serious damage to the economy. That's why our politicians will NOT do away with Freddie and Fannie.
traderjoetn, with all due respect, you are mistaken to believe the 30 yr mortgage will become a thing of the past. Fannie doesnt hold most of the mortgages on its balance sheet, but rather bundles them as mortgage backed securities which are purchased by private investors. The 600 billion or so mortgages they now have on their balance sheet for the most part just arrived during the past 5 years.
Are you thinking the 30 year mortgage came about just during the past 5 years?
To reiterate: the vast majority of FnF mortgages they purchase are sold off as mortgage backed securities. This will obviously continue even without FnF existence.
Are crazy. What about the poor people that invested and bought the stock all these years, don't they count. I would end up losing a life's saving and at my age I might as well jump off a bridge if FNMA is cut dead like like to see it. #$%$ you no good SOB.
If you are telling the truth and really invested your life savings in failed fnf then you are an idiot. If so, you SHOULD jump off a bridge. It would strengthen the gene pool.
The poor people who bought this stock were NOT investing. They war gambling that fannie would be allowed to continue in business by the gov't even after the gov't said it was going to wind them down.
Yes it is a socialist idea where govt and the private sector work together, but your statement is not totally true in that the idea did not fail. It has simply run its coarse in that the political will for its survival seems to be waning.
FnF have worked out, our govt simply wants to improve upon it.
Other countries seem to get by just fine without a 30-year mortgage, so why not ours? The only thing 30-year mortgages have done is artificially pump up the value of housing. Over the decades, lower monthly payments simply allowed sellers to increase their sales prices (the same way interest-only loans and negative-amortization mortgages pumped up the housing bubble). If you want more "affordability", why not let FNMA just stamp its government guarantee on more of those types of loans and see what happens. It would create the mother of all bubbles.