The Patriot Post® · Trump Plans to Pardon Fannie and Freddie

U.S. Treasury Secretary Steven Mnuchin announced a plan last week to seek the release of mortgage-finance behemoths Fannie Mae and Freddie Mac from government control. The plan notes, “After 11 years, [it is] time to bring conservatorships to an end. Ending the conservatorships is a critical step to reducing that government influence” on the housing market. Mnuchin explained, “Our view is that the government footprint has become too big. There are people in Washington who are happy to leave this the way it is for another 10 or 20 years, and that’s not us. We feel an obligation to try and fix this.”

The Wall Street Journal notes, “Fannie and Freddie don’t make loans but instead buy them from lenders and package them into securities that are sold to other investors. Figuring out how to refashion the companies remains the largest single piece of unfinished business from the financial crisis. The government assumed control of the firms in 2008 during the height of the crisis to prevent their failure, which officials’ feared would trigger a broader collapse in the housing market.”

As astute readers will recall, Democrats seeded the 2008 financial crisis with horrible mortgage-lending policies beginning in the 1990s. Trump aims to undo some of that government interference.

The Trump administration’s 50-part plan seeks “to level the playing field between the two government-sponsored enterprises, limit government-backing for the institutions for a fee and invite more private competition into the mortgage market,” reports The Hill. The plan to release Fannie and Freddie is a move in the right direction, but there is no guarantee that it will be implemented before 2020, as it would require legislative action from a divided Congress.