Like so many issues in Washington these days, the debate over what to do with the nation’s housing Government Sponsored Enterprises (GSE)—Fannie Mae and Freddie Mac—has been caught up in the Jihad against the role of government in any form.
That’s a shame because last spring, with the announcement from Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) of a bipartisan bill to reform the nation’s housing finance system, it appeared that the question of what to do with Fannie Mae and Freddie Mac had finally been answered.
Instead, the Johnson-Crapo bill became another victim of ultra-right ideology, as strident opposition to anything short of the elimination of any government role in the mortgage backed securities marketplace remains unacceptable to House Republicans. Their approach—which was incorporated in the PATH Act (which passed the House last year), proposed virtually eliminating the Federal guarantee of mortgages in five years.
That’s not to say the Johnson-Crapo bill was perfect by any means. Compromise isn’t about creating the best solution, but rather a better solution than the status quo.