Taking Charge of the FNMA-FHLMC Reigns--I have some concerns if the big banks take over, certainly based on their "subpar" performance for our industry in the past few years.

In an article entitled "Banks Want Pieces of Fannie-Freddie Pie", written by Louise Story, in the January 21, 2011 edition of the NEW YORK TIMES, the author suggested that the big banks, including Wells Fargo, Morgan Stanley and Goldman Sachs, are waiting in the wings to take over the dispensing of government guarantees of mortgage loans, a function still under the control of FNMA and FHLMC (the "Agencies")   The current tenure of the Agencies ends on December 31, 2011, and President Obama is allegedly developing a plan for the Agencies which will be made public in the next month or two.

While I certainly cannot endorse the continuation of things they way they have been administered by the Agencies, I am fearful that giving the banks the ability to issue government backed mortgages will lead to more problems with the system, based on the greed and avarice displayed by the banks in the sub-prime mortgage years and the deplorable way banks are managing mortgage defaults and short sales.

While I am not a believer in bigger government, i believe that government guarantees should be given by an instrument of the government. Our industry should have some input into a new, strictly government run, organization which has direct reporting responsibility to the Secretary of the Treasury. Sensible guidelines for mortgage undeerwriting, and mortgage defaults, should be put in place, and the new entity should be run by civil servants, not kids just out of high school.

I would be interested in your take here. Without government guarantees, there are many loans which will not be made by banks and other lending institutions. We need a loan guaranteeing vehicle; I am just not sure we need a vehicle controlled by the foxes taking care of the chicken coop.