First, it’s a step in the wrong direction. My proposal is for the FFB to offer fixed rate financing with no prepay penalty to the agencies at the govt’s ‘policy rate’ for said mortgage funding.

Second, they are only doing this because after decades of successfully getting people into houses who arguably wouldn’t have been there, presumably serving numerous aspects of public purpose, they suffer ‘losses’ when in 2008 govt policy causes 8 million people to lose their jobs pretty much all at once.

Nor are those offering to ‘help’ doing out of charity…

Fannie and Freddie plan gets Washington attention

November 25 (FT) — Bob Corker, the Republican senator co-sponsoring a bill to wind down Fannie Mae and Freddie Mac, has become the first senior politician to express openness to a hedge fund proposal to take over core operations of the US mortgage finance giants. He found the plan interesting, he added, saying that it validated his legislation because it would work only in a reformed housing finance system. The Fairholme plan would eliminate Fannie and Freddie, and transfer their future mortgage guarantee business to two new private sector companies. The new entities would be capitalised with assets equivalent to the $34.6bn face value of Fannie and Freddie’s preferred shares, plus the proceeds of a $17.3bn rights issue, potentially backed by private equity.