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Should Freddie And Fannie Be Handed Over To The Fed?

In a recent op-ed from National Mortgage News, Peter J. Wallison outlined reasons why he believes Freddie Mac and Fannie Mae should stay away from the Federal Reserve. His stance comes after an American Banker piece that first posed the question, prompting many in the industry to weigh in.

"Fannie and Freddie are surely problem children, but making them wards of the Federal Reserve is a very bad idea," wrote Wallison.

"It would do nothing to stop the destructive housing finance policies Fannie and Freddie currently pursue, but would assure that another major sector of economy would fall under the Fed’s permanent control."

One of the major issues Wallison addressed is the increased regulation that could possibly come from the Fed. He argues that both of these institutions already face steep regulation and the Fed is not an expert in the housing finance industry, whereas, the Federal Housing Finance Agency specializes in the area.

"The Fed, moreover, has failed even in its current assignment as a monitor of the economy’s health," according to Walliston.

"Some might recall, for example, that the Fed did not anticipate the 2008 financial crisis."

To learn more about Wallison's opinion on Freddie and Fannie possibly moving into Fed control, click on the image above.

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