Fannie and Freddie’s cousin, Johnson-Crapo’s creation, smells.
A corollary to Shakespeare’s Romeo and Juliet adage, “A rose by any other name would smell as sweet,” is that “garbage by any other name would smell as awful.”
The latter seems apropos to the “reform” of the government-sponsored housing enterprises Fannie Mae and Freddie Mac introduced by the Senators Tim Johnson (D-S.D.), and Mike Crapo (R-Idaho), the chairman and ranking member of the Senate Banking Committee. The bill was set to be marked up April 29, but was delayed after opposition garnered from many quarters. Now after completely ignoring conservative concerns and pandering to lefties like Sen. Elizabeth Warren (D-Mass.), Crapo and Johnson will likely try again this Thursday to get a bare majority to vote the bill out of committee.
A letter last month coordinated by the Competitive Enterprise Institute and signed by 26 conservative and free-market groups declares that Johnson-Crapo “does not constitute real reform,” but an expansion of the type of government intervention that fueled the housing crisis in the first place.
While the media often characterizes this plan as “ending” Fannie and Freddie, most of their functions would simply be transferred to a new giant government entity, the Federal Mortgage Insurance Corporation, or what we could call “Feddie Mic.” Not only would the government’s role in subsidizing and micromanaging housing not be reduced, in some ways it would be substantially increased.
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