Paul Volcker: "It's clear Fannie Mae and Freddie Mac need to go."
SmartMoney just published an interesting interview with former Federal Reserve chairman and recent Obama economic adviser Paul Volcker. I wonder if the White House will take this piece of advice seriously:
Q. What's missing?
[Volcker]: People talk about Fannie Mae and Freddie Mac. That's a challenge for next year and year following. We are going to have to reconstruct the whole mortgage market and you can't do that overnight. The mortgage market now is almost a wholly owned subsidiary of the United States government. Almost all the mortgages made now are insured by the government, bought by the government, and the guys at Fannie Mae and Freddie Mac are the market.
Not much exists without the government running it. I don't think that's what we want. A lot of problems surround the whole mortgage market. It's clear Fannie Mae and Freddie Mac need to go. We don't need these hybrid institutions. You don't know whether they should be responsible to the government or to stockholders. It's an unfortunate invention.
Read the whole interview here. Back in March, Reason Foundation Director of Economic Research Anthony Randazzo explained why it's time to kick Fannie Mae and Freddie Mac out of the housing market.