The Bush-Obama, Paulson-Geithner, Republican-Democrat policy of having the federal government dominate the mortgage finance business until the Singularity reunites Christ with Valentine Michael Smith has lost the editorial board of USA Today:
As bailouts go, nothing quite matches the torrent of taxpayer money still pouring into Fannie Mae and Freddie Mac, the housing giants that now guarantee nearly half of the nation's $11.7 trillion in mortgages.
To cover loans that go sour, the federal government has already doled out almost $145 billion, and the non-partisan Congressional Budget Office estimates the final tab will be about $381 billion. [...] [M]ost of this money won't get paid back. And even now, there's little talk in Washington about how to fix the problem. [...]
[They can't go on] forever as wards of the state, soaking up taxpayer cash. They also should not be allowed to go back to their unusual former status as publicly traded companies that are also "government-sponsored enterprises." That's why they got in trouble in the first place, paying outsized compensation and backing risky mortgages because politicians of both parties prodded them to do so.
Fannie and Freddie need to be rethought entirely, if not eliminated outright. And the time to start planning for that is now. [...]
Their "American dream" mission of profitably making risk disappear, so that banks would lend and people could buy their own homes, was always a fantasy. They merely took risks from banks and piled it on the taxpayers. Now everyone is paying the price.
We can't go on like this. Leaving taxpayers on the hook for this continuing disaster isn't just unfair. It's economically ruinous. And nobody in the Treasury Department, the Fed, or the administration has anything resembling an exit strategy.
More Reason on Fannie/Freddie here, including the Reason Foundation's Anthony Randazzo succinct point in March: "It's time to kick Fannie Mae and Freddie Mac out of the housing market."