Time to Kick GSE’s in the Fannie

Now that the government has signed off on a $25-billion bailout of home mortgage giants Fannie Mae and Freddie Mac, the obvious question is: What next?Steve Forbes, editor-in-chief of Forbes magazine, thinks breaking up is hard to do, but necessary. "The Bush Administration should vigorously push to have Fannie and Freddie recapitalized and broken up into 10 to 12 companies, with their ties to the government completely severed," as he explained in the August 11 edition. According to Forbes, getting 10 to 12 smaller private companies involved in mortgages "will help revive and reinvigorate that sector."Not that it's likely to happen. The Wall Street Journal warned about Fannie Mae more than six years ago and those concerns went unheeded in Washington or on the network news. One key reason includes the $170 million in lobbying and contributions made by Fannie and Freddie. Another is that the liberal media are content making Enron the bogeyman and letting top Clinton/Obama Democrats slide on their involvement running Fannie Mae.Forbes isn't optimistic either. In his piece "Bust Up These Beasts," he concludes: "The Bush Administration has no appetite for such a fight. Treasury Chief Henry Paulson probably doesn't even realize the need for it. And, of course, Capitol Hill wants no change."

Dan Gainor
Dan Gainor is The Boone Pickens Free Market Fellow and Vice President for Business and Culture for the Media Research Center