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Could the Agencies actually privatize?

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They can privatize but I'll rue the day my mutual funds invest in them...and, conversely I expect my mutual funds would rue the day they did too.
 
Terrel L. Shields said:
They can privatize but I'll rue the day my mutual funds invest in them...and, conversely I expect my mutual funds would rue the day they did too.
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I'll be interested to see how that works. Will FHA just explode, then? Who is going to make loans to marginal buyers? Certainly not the agencies - whose purpose now would be maximization of stock owners' interests - not ensuring affordable housing...
 
FHFA is NOT FHA -FHFA Regulates Fannie-Freddie and others FHA is HUD :)
 
glenn walker said:
FHFA is NOT FHA -FHFA Regulates Fannie-Freddie and others FHA is HUD :)
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Ummm - yes... sorry - what I meant to convey was a question whether FHA (since now it would be the only source for affordable housing insurance) would explode (i.e. grow rapidly) with volume... FHFA would, I assume, go away if the agencies are privatized.
 
The two questions that have to be answered:

1. Does Private Fannie have the Full Faith and Credit of the US government behind it? If not, then it has the same risk as any under-capitalized corporation.
2. How much does the Govt get for its efforts. As an 'angel' investor does it own 10% of Fannie or 95% of Fannie.

It severely bothers me that Ex-Treasury Chief Hank Paulson owns shares in the existing Fannie.
 
Fannie & Freddie will never be true- private companies, before they were placed into receivership, technically they were private corporations, but in reality they have always acted as a "arm" of the Treasury and Federal reserve, they have a open ended line of credit with the goverment, and are too big to fail. The money center banks have always used them as a "sinking fund" to unload their loans on. The politicians have used the GSE'S to further there pet-housing policy's. Finally NOBODY wants to hold 3.5% 30 year paper, there is no money in it and the risk is to high. as far as low down payment loans, they will always be around because real estate prices would collapse, today nobody is really buying real estate with 3%-5% down its more like a lease with an -option to buy, and unless it goes up in value, the poor borrower is simply treading water :)
 
glenn walker said:
technically they were private corporations, but in reality they have always acted as a "arm" of the Treasury and Federal reserve, they have a open ended line of credit with the goverment, and are too big to fail.
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exactly.
 
glenn walker said:
Fannie & Freddie will never be true- private companies, before they were placed into receivership, technically they were private corporations, but in reality they have always acted as a "arm" of the Treasury and Federal reserve, they have a open ended line of credit with the goverment, and are too big to fail. The money center banks have always used them as a "sinking fund" to unload their loans on. The politicians have used the GSE'S to further there pet-housing policy's. Finally NOBODY wants to hold 3.5% 30 year paper, there is no money in it and the risk is to high. as far as low down payment loans, they will always be around because real estate prices would collapse, today nobody is really buying real estate with 3%-5% down its more like a lease with an -option to buy, and unless it goes up in value, the poor borrower is simply treading water :)
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exactly! If they were truly privatized, the fall out would be simply catastrophic to the US (and world) economy(s).
 
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