The federal takeover of the nation’s two largest mortgage finance companies may prove to be very expensive for the American taxpayer and supports the premise that in a globalized economy, government sponsored enterprises are not feasible. Fannie Mae and Freddie Mac have enjoyed the benefits of publicly traded corporations with a government subsidy. That concept might have been fine 40 years ago. The federal takeover places all risk on the American taxpayer and ensures that neither company can fail. It is time that Congress seriously considers a future without government sponsored enterprises. The options include complete liquidation of the companies into smaller entities that bare their own risk or transforming the companies into strictly government agencies. The federal takeover makes the status quo unfeasible and unreasonable for taxpayers. Both of the available options pose a risk to homeowners and taxpayers, but now is the time for Congress to reshape the mortgage industry to meet the new demands of a globalized market economy.
