Coherent policy from Washington—not a financial bailout—is what mortgage titans Fannie Mae and Freddie Mac are most in need of, writes former Fannie chief Franklin Raines in the Washington Post. “They have more than enough capital to meet their cash obligations,” he writes, as well as billions in assets. He accuses the White House of a "multiyear effort to eliminate the companies by talking them down to the financial markets," and says they'll do fine, without subsidies, if they are given "unfettered access to the private markets."
"Ideologues in the Bush administration and commercial competitors have skillfully manipulated the markets to undermine Fannie and Freddie for more than six years,'' writes Raines, who was ousted in 2004 after $6.3 billion in accounting errors turned up. The two companies, he writes, should remain the US mortgage market foundation, but be allowed to operate as traditional lenders—offering new mortgage products, for instance—and, hopefully, earn profit. It's up to the White House and Congress to codify the lenders' roles, he says, and the sooner the better.