Earlier this week, President Obama proposed the complete privatization of Federal National Mortgage Association (Fannie Mae). Fannie Mae was originally started as a government-owned corporation chartered to buy up mortgages issued by private banks and thus increase the cash available for home mortgages. It was one of the New Deal initiatives begun in 1938.
Fannie Mae, once a totally government enterprise, was slowly privatized throughout the years. In 1968 it was removed from the Federal Budget and restructured into a privately-owned corporation.
During the first 30 years of operation as a Federal instrument there was never a problem, a budget overrun, or a need for a bailout. It did not make a profit and it did not risk its capital in subprime loans. Under first the Clinton administration and then the Bush administration, Fannie Mae went wild. Its executives began drawing private-sector style salaries and it became a full partner in bankster-initiated so-called “aggressive product marketing”.
Fannie Mae did not fail as a public enterprise, it did so as a privatized public asset with political connections.
Now with the application of governmental restraint and infusions of taxpayer funds, Fannie Mae has bailed itself out and is regularly producing a “profit” for the Federal Government. One of the reasons that the budget deficit this year is the lowest its ever been during the Obama regime is because Fannie Mae is being productive. This is not the time to turn it over to Bankster control.
Fannie Mae should be restructured into the mold in which it was founded: a government enterprise run under heavy regulation by civil servants and not the wheeler-dealers who dominated the Clinton years and have made inroads during Obama’s romp in D.C. Instead of continuing experiments in fast-track, aggressive capitalism, let it do its job as a staid, safe supporter of the secondary mortgage market.