Are Fannie Mae and Freddi Mac going bye, bye?

Are Fannie Mae and Freddie Mac going bye, bye? There are many who say they should and incredibly, Democrat Barney Frank, chairman of the House Financial Services Committee is one of them.

It hasn't always been this way. For years, Frank has been a strong supporter of both Fannie Mae and Freddie Mac, the behemoth failed government agencies that are in such bad shape that they can't even pay Uncle Sam the dividends owed under the conservatorship deal reached two years ago (Fan and Fred had to borrow from the treasury to make their payment). Wouldn't it be nice if homeowner's had that same option?

Frank told Larry Kudlow in a recent interview, "I hope by next year we'll have abolished Fannie and Freddie," he said. And went on to say that "it was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it." Frank also added, "I had been too sanguine about Fannie and Freddie."

Frank agreed with Kudlow that both Fan and Fred should be slowly down-sized and fazed into the FHA and that the private sector needs to return to the housing market as the government withdraws.

Frank's about face may be fueled by upcoming elections as polls show that the $150 billion Fan-Fred bailout, which the Congressional Budget Office estimates could rise to $400 billion, is detested by voters and taxpayers alike. Detest seems to be an understatement, especially for the many American's losing their homes due to the real estate market collapse fueled by bad government policies.

History has shown that the system of federal affordable-housing mandates was central to the real-estate collapse, including the mandates on Fannie and Freddie. Treasury Secretary Tim Geithner seems to be in agreement. He recently was quoted as saying, "We will not support a return to the system where private gains are subsidized by taxpayer losses." Although it's nice to see politician's waking up to these facts, for those of us working directly with homeowners, we know it is far too late for many folks.

There is a lot that needs to happen before we can get too excited about these rumblings from Frank and Geithner, but it is a ray of sunshine nonetheless.