James Pethokoukis

So Team Obama is considering a truly horrible plan: to re-imagine Freddie and Freddie as new entities that are just like the current failed ones, but with government taking over all the toxic stuff . Tell it to me WaPo:

The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac  that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said. The bad debts the firms own would be placed in new government-backed financial institutions — so-called bad banks — that would take responsibility for collecting as much of the outstanding balance as possible. What would be left would be two healthy financial companies with a clean slate.

Me: Well, that is one approach.  Or perhaps  …. we could just break up and replace them with a larger number of smaller private companies — ones with no implied government guarantees. They would be left to thrive or fail or get taken over or whatever.  Then again, as this posts says, no one is going to be buying houses anyways.