Backtracking Lawmakers Expand U.S. Government Role in Mortgages - Yahoo! Finance
An 11th-hour payroll tax cut extension signed into law last week would for the first time divert funds directly from Fannie Mae and Freddie Mac, the two mortgage-finance companies under U.S. conservatorship, to pay for general government expenses.
That move came after two others that also are expected to increase government involvement: Lawmakers allowed a tax break on private mortgage insurance to expire and raised loan limits for mortgages insured by the Federal Housing Administration. Advocates of private mortgage finance say they are concerned that using fees from Fannie Mae and Freddie Mac is setting a precedent that will keep the government in the mortgage business for a decade or more.
It is always entertaining to hear politicians (in this case the Obama Administration and all the republican presidential contenders) promising to eliminate federal agencies, even if they can't remember which ones. In this case Obama talked about winding down Fannie and Freddie. But the importance of the housing market to the overall economy is more obvious now than ever, and the GSEs are doing something that the so-called "private sector" isn't doing with any enthusiasm now: purchasing and securitizing home mortgages. And now we see that Congress has decided to take money from the GSEs instead of raising taxes on billionaires. How clever. I hope His Lordship King Grover Norquist approves of this.