Saturday, February 12, 2011

Obama housing plan to end Fannie, Freddie - The Hill's On The Money

Obama housing plan to end Fannie, Freddie - The Hill's On The Money: "Under the administration's plan, there would be no future Fannie and Freddie providing broad, full guarantees in the housing market, according to senior administration officials.

While the administration's report calls for the winding down of Fannie and Freddie, it does not reach a single conclusion as to what the housing market should look like at the end of the transition. Rather, it provides three options, with varying roles for the government to play.
I notice once again that the Obama administration is big on proposing sweeping changes to huge sectors of the economy, but small on saying exactly how they expect it to be done. Same thing with health care reform--they left it up to Congress. The House passed one version, the Senate passed a different one, and then when Scott Brown got elected and the Democrats lost their filibuster-proof majority in the Senate, they passed up conference committee entirely and had the House ram through the flawed Senate bill (it doesn't even have a severability clause). Now, here they go with this huge plan to "wind down" Fannie and Freddie, but there is a menu of approaches for doing it. Somebody else is supposed to take responsibility for deciding how this can be done.

And how about that great mortgage reformation plan the Administration came up with that didn't work?

Geithner's casual la-de-da attitude toward this is typical of him.

If I made major decisions this way, people would say I was nuts. If you decide to do something, the "how" is everything. It isn't an afterthought. If you have decided to do away with the current massive federal government role in the housing market, you need first to know exactly HOW you are going to do it. If there isn't a clear "how," then it is time to go back to the drawing board--not to start the process of change.

This is like having a surgeon who says, "I am going to do an operation on you that has never been done before. We have come up with three different ways to do it. We will start the operation, and then I will let the surgical team decide which one of them to use." Wouldn't you suspect that the surgeon actually doesn't know how to do this at all? And that maybe the whole thing will result in muddling through and maybe causing a disaster?

1 comment:

Anonymous said...

The implication is the private sector will figure it out and that's not the government's job.