We had the WaPo story earlier: "Politics, shaky economy create no rush to restructure Fannie and Freddie" (FNM; FRE)".
From the WSJ's Deal Journal:
If not now, when?
The Washington Post reports today that Congress and the White House have shelved proposals to overhaul Fannie Mae and Freddie Mac. In short, that means the same problems that led to the near collapse of the mortgage giants and resulted in their $125 billion bail out – the largest of all financial crisis bail outs – are still unresolved.
The biggest problem: How to shrink Fannie and Freddie so they are still large enough to keep funding the trillion dollar mortgage market, but not large enough to again threaten the financial system. In other words, how can the government prevent these quasi-government agencies–or an agency that might replace them–from again getting “too big to fail.”...
...Ironically, the loudest call now for a quick revamp is coming from Rep. Barney Frank, once Fannie and Freddie’s staunchest defender. Frank has called for Fannie and Freddie to be abolished and has scheduled a hearing on the matter this month, according to the Post.But hearings are easy. The real challenge is figuring out how to nationalize Fannie and Freddie without subjecting the government to endless risk and expense, or to privatize them in a way that can provide mortgage liquidity while keeping rates low. And there seems to be near-zero political will to actually restructure Fannie and Freddie, from either the political left or right. That is especially true now, in an election year, when the historically low mortgage rates the mortgage giants are providing play well with nearly all voters....
...If not now, when? The answer may be never.
From Structured Finance News:
Geithner: We'll Get to GSE Overhaul
Treasury Secretary Tim Geithner on Wednesday defended the administration's decision not to outline a plan for the future of Fannie Mae and Freddie Mac until 2011, saying it was focused on other issues.
"We are doing a lot of things," Geithner told lawmakers at a hearing. "We've just got a lot going on, and we just thought to do it well and to do it carefully, do it right, we wanted to go through a process of more careful reflection....MORE
I used to have a comptroller who would answer any request with "I'm extreeeeemly busy".
He got canned.
