The Trump administration’s actions suggest it’s unwilling or unable to fix housing finance.
Bloomberg-
This was supposed to be the year when the U.S. government would finally address one of the biggest pieces of unfinished business from the 2008 financial crisis: reforming Fannie Mae and Freddie Mac, the quasi-state entities that dominate the U.S. mortgage market.
Unfortunately, the Trump administration’s actions so far suggest it’s unwilling or unable to handle the task.
The collapse of the entities during the financial crisis offers a case study on how public-private partnerships can go wrong. Mandated by Congress to promote home ownership, they operated as privately owned corporations that bought and guaranteed mortgage loans. They delivered big profits for private shareholders, thanks in large part to the market’s assumption that the government would bail them out in a crisis. In 2008, that assumption proved correct: Amid heavy losses, the Treasury had to step in with a $187 billion capital injection and put the entities into a government conservatorship.
