I just caught this 5-minute news clip from an interview with the Philadelphia Federal Reserve President, Charles Plosser, who argues that the government should no longer be involved in home loan market.
Philly Fed Pres.: Dont Need Gov't Involved in Home Mortgages
The essential statement is that Fannie and Freddie were needed, once upon a time, to create a secondary market for home loans. That need is past, we have a strong private secondary market without any need for further government involvement. In fact, you could make the case that because Fannie and Freddie were involved, undercutting banks, that the banks had to take on riskier positions. Eliminating these GSEs will take time and likely increase rates ("to where they should be" to account for the associated risk).
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