Fannie and Freddie: Next Steps

I've said "I've always hated the implicit government backing of Freddie and Fannie (and am glad we'll never reconstitute those institutions again)." Now, National Review's Deroy Murdock explains how to fulfill that mission--and establish the new Administration's economic credentials:

Here’s how Barack Obama can hit an economic home run: Privatize Fannie Mae and Freddie Mac.

Dissecting these mega-agencies and selling the resulting slivers would accomplish three key objectives. First, this would begin to reverse Comrade Bush’s neo-Marxist nationalizations. Second, without raising taxes, this would generate revenue to start erasing some of the $1.2 trillion in red ink that will gush from the next federal budget. Third, this would establish a price floor under so-called toxic mortgages and re-circulate them into the economy.

By purchasing shaky mortgages held by people with sketchy credit, Fannie and Freddie were the twin engines that powered the housing boom. When they ran out of gas, the contraption crashed back to earth. Want to see the wreckage? Look around.

Fully nationalized, both Fannie and Freddie are too big for any private or institution to swallow outright. They are jointly worth about $5 trillion. So, each should be sliced up before being sold.

Fannie and Freddie’s assets should be pooled and alphabetized by the surname of each mortgage holder. Thus, Abramson and Acosta top the list. Marlowe and Moskowitz occupy its middle. Zoro and Zucker will bring up the rear. These assets then would be segmented alphabetically into 26 units.

These 26 companies would be auctioned to the highest bidders in transparent, public ceremonies. Revenues would go to the Treasury. This income should be reserved to offset the massive debts that are the domestic legacy Bush has bequeathed America’s unborn after his relentless, eight-year spendathon.