Fannie Mae and Freddie Mac To Be Discontinued?

President Obama has urged, in essence, the shutting down of Fannie Mae and Freddie Mac backed securities, which includes the traditional 30-year insured loan. He gave a speech at the beginning of August with his ideas on how to go about doing this and why. AgBeat, a highly respected and popular website providing quality content regarding American entrepreneurship and business, gives three reasons to end Fannie and Freddie:

Consider the following benefits of the end of Fannie Mae and Freddie Mac:

  1. Home loans could fall in number because private capital may tighten lending guidelines. Yet, the reduction in qualified borrowers could make the economy more stable.

  2. The winding down of GSEs would take the taxpayers off the hook for the kind of emergency bailouts required after 2008, when the U.S. Treasury pumped in nearly $200 billion to keep the two entities operating.

  3. If the Government were not bankrolling Fannie Mae and Freddie Mac, there would be more funds available for other important political and social issues, such as education and job growth.

There are also now two bills on the floor offering different options for winding down the GSEs: The Housing-Finance Reform and Taxpayer Protection Act of 2013, and The Protecting American Taxpayers and Homeowners Act. AgBeat gives a concise and helpful description of each of these as well.

What do you think? Should America go ahead with this plan? Are these bills really good options? Would we be reverting back to another recession in the near future?

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