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Editorials Attacking Fannie Mae and Freddie Mac Are Seriously Misguided

While the revelation of Freddie Mac’s accounting problems raises legitimate concerns about determining whether reform measures may be required, that process is only now getting underway in congressional hearings. Editorial writers who are jumping the gun and questioning whether these institutions deserve the implicit backing of the federal government are doing the public an immense disservice. First, they are focusing attention away from the real issues at hand. And second, they are suggesting proposals that risk seriously damaging a financial system that has been enormously beneficial to providing decent, affordable housing to the American people.

Maybe these writers are too young to appreciate the progress that has been made through Fannie Mae and Freddie Mac because they don’t remember the days, about three decades ago, when the nation’s home buyers had to rely on passbook savings accounts for their mortgage money. That source of financing was unreliable, to say the least, and there were some painful times in the housing cycle when home financing was largely unavailable at any price.

Or maybe these writers don’t grasp a reality that is obvious to most people in this country: Homeownership and rental housing opportunity are the glue that binds healthy neighborhoods and the means for families to get ahead and strive for achieving the good things in life that are so abundant in America. We shouldn’t lose sight of the fact that Fannie Mae and Freddie Mac, in addition to their activities on behalf of home buying, also help bring financing to multifamily housing.

A July 5 editorial in the Dallas Morning News recently noted that, “providing available and affordable housing loans is an important public mission…and no one should willingly weaken this effort.” That same article concludes: “Congress must rethink the federal government’s neither-fish-nor-fowl relationship with Fannie Mae and Freddie Mac and decide whether the federal government should remain the mortgage market’s traffic cop, or whether competition and access are better served if Fannie Mae and Freddie Mac didn’t operate from a playing field intentionally tilted in their favor.”

What is the point of suggesting that housing is an important public concern and then proposing to rob it of the national commitment that has been indispensable in creating the soundest, most effective and efficient home financing system anywhere in the world today?

The truth is that our housing finance delivery system would not be where it is today without Fannie Mae and Freddie Mac. And as we look to address the housing needs of our growing population, we will not get to where we want to be in the future if their strength is sapped. That is a current danger in Washington.

As hearings in Congress continue, lawmakers need to gather all the facts and take a cautious approach to any reform or change in the regulatory oversight of the GSEs. Otherwise, we risk damaging our national priority for housing and creating a financing system that would give the editorialists at the Dallas Morning News something to really complain about.

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