Three possible Freddie and Fannie reform scenarios

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Daily Caller:

On February 9, House Republicans will begin their effort to reform government sponsored enterprises Fannie Mae and Freddie Mac, the giant mortgage lenders many blame for the 2008 financial collapse. The firms were both left out of the Dodd-Frank financial reform bill that was passed last summer to remedy the causes of the most recent recession.

But while Republicans on the Hill are anxious to finally tackle Fannie Mae and Freddie Mac, confusion abounds as to what direction they will take. And after factoring in the politics of the upcoming 2012 elections, any bipartisan reform will be slow in coming as Republicans and Democrats disagree on possible courses of action.

But because talk of Fannie and Freddie reform won’t be going away anytime soon, The Daily Caller thought you should know the three possible reform scenarios that are currently being debated.

1. Getting the “government” out of Government Sponsored Enterprise. The first scenario, favored by senior Republicans on the Financial Services Committee, like Rep. Jeb Hensarling of Texas, and most fiscal conservatives, is to scrap Fannie and Freddie altogether. It is by far the most drastic and radical approach, but when it comes to Fannie and Freddie, that just might be ok. As Anthony Randazzo, director of Economic Research at the Reason Foundation, pointed out, getting the government out of the business of securitizing mortgages does not mean low-income families would get stripped of their housing subsidies. On the contrary, affordable housing programs under the Federal Housing Authority would live on.