The Other Mortgage Market Bailout
The government continues its push to “rescue” the mortgage market. Bloomberg outlines the latest plan, ordering Fannie and Freddie to buy $40 billion per month in underperforming mortgage bonds. Amazingly, this is separate from the $700 billion dollar TARP plan.
This comes at a time when, despite the criticism over their handling of the mortgage market, Fannie Mae and Freddie Mac are getting larger, not smaller. Their budget is increasing nearly 16% next year. Given the poor management before and all the trouble since, one wonders if giving Fannie and Freddie more authority and control over the housing market is the right way to go.