Most articles give the appearance that Fannie and Freddie are private sector and market mortgage lenders this one tells more of what they really were, Government Sponsored Enterprises that negatively influenced the private sector thus causing this economic crisis. They are not truely private sector companies and so the market that has recently failed is not due to Wall Street corruption/greed or the private sector but rather due to Fannie and Freddie's failure and influence on Wall Street. For more in detail see label on Mortgage Crisis and links at bottom of this blog.

Questions Remain on Fannie, FreddieCBNNews.com - WASHINGTON - Treasury Secretary Henry Paulson said Wednesday that allowing mortgage giants Fannie Mae and Freddie Mac to return to their old operating ways is not an option.

Congress and the next administration must decide the proper role government should play in supporting home ownership in light of the severe economic costs imposed on the nation from the bursting of the housing bubble, Paulson said.

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The government in September took control of Fannie and Freddie, placing them in conservatorship. Paulson offered thoughts on a variety of possible solutions on what should follow that move, but did not endorse any.

One option would be to remove all direct and indirect government support and privatize the companies by breaking them up and selling them. But drawbacks to that approach included that it would likely offer a low rate of return to potential investors, Paulson said in a speech to the Economic Club of Washington.

"I am skeptical that a 'break it up and privatize it' option will prove to be a robust or even viable model of any substantial scale without some sort of government support or protection," he said.

Paulson also raised the possibility of creating a public-utility type of company that would guarantee mortgage credit.

Under this plan, Congress would replace Fannie and Freddie with one or two private sector entities that would purchase and securitize mortgages with a credit guarantee backed by the federal government. The new companies would be privately owned but governed by a rate-setting commission that would establish a targeted rate of return, he said.

Such a proposal would be able to address the inherent conflicts between private ownership and public purpose that must be resolved to avoid the potential for another crisis in mortgage financing, Paulson said.

"With the knowledge of recent experience, we have a responsibility to begin work now on a long-term (government sponsored enterprises) structure which avoids the dangerous mix of policy and market distortions created by the former flawed GSE mode," he said.

Washington-based Fannie Mae and McLean, Va.-based Freddie Mac own or guarantee around half of the $10.6 trillion in U.S. outstanding home loan debt.

Copyright 2009 by The Associated Press. All Rights Reserved."

Also, see:

New York Times articles in 1999 and 2003 on the Economy
New York Times not telling you the whole story once again
Media is not giving you the whole Mortgage Crisis story: Fannie and Freddie is Enron x 19/Microsoft Sized Monopoly/Leading Compaign Giver and LobbyistThe Economy and what Big Media is not telling you...
Obama's connection with Fannie Mae and Freddie Mac ignored in Big Media. The Fact that Bush tried to reform Freddie and Fannie ignored in Big Media.
Mortgage Crisis
Orson Scott Card (Democrat who is also, highly critical of the free-market and capitalism) writes a powerful argument and telling piece!!! Must read!!
$4.6 of the $6.6 trillion mortgage-backed securities at the heart of the financial crisis are from Government Sponsored Enterprises!!!!
Dow has gained 1400 points since 11/21/2008 after dropping 2000 points from 11/4/2008 to 11/20/2008 inspite of recession and unemployment news...
New York Times refutes itself when blaming Bush for the economic crisis. Fannie and Freddie leveraged their government-sponsored advantages...
BBC News: "Fannie...and...Freddie is the biggest corporate rescue in history...leaving a grey area between being government owned and private sector"
Fannie and Freddie CEO's make it clear that Fannie and Freddie were not truely private sector companies....
The economy and the cause and how many know enough to justify their vote? Testimony of Brian Welch of Korn. Jill Stanek's blog moves into top 7000.
Wall Street Journal reports on causes of the housing bubble that burst our economy and in the long run helped no one out...
Freddie Mac and Fannie Mae in 5th grade terms

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