Isakson Introduces Bill To Eliminate Fannie Mae, Freddie Mac

Just received the following. Haven’t had time to break it down in detail, but I suspect the model would be to set up a replacement organization similar to FHA which has signficant up front Mortgage Insurance fees on all loans, and additional monthly MI fees based on length and loan to value of loans.

WASHINGTON – Drawing on more than 30 years of experience in the real estate industry, U.S. Senator Johnny Isakson, R-Ga., today introduced legislation that gets taxpayers out of the business of bailing out the mortgage industry by winding down Fannie Mae and Freddie Mac and creating a new transitional program to securitize high-quality mortgages.

The legislation creates a mechanism to pay back taxpayers for the bailout of Fannie Mae and Freddie Mac and mandates that the transitional program be turned over to the private sector after 10 years. “This legislation is a detailed roadmap to change the unsustainable course we’re on in which the American taxpayers have been bailing out the mortgage industry to the tune of hundreds of billions of dollars. My bill will shut down Fannie Mae and Freddie Mac through an orderly transition, and it will repay the taxpayers,” said Isakson. “I invite my colleagues in Congress, both Democrat and Republican, to move this bill forward to strengthen our nation’s housing finance system and our nation’s economy.”

Specifically, Isakson’s bill:

·Shuts down Fannie Mae and Freddie MacCreates a new transitional program to guarantee securitizations of high-quality mortgages for a 10-year period after which the new operation shall be privatizedCreates a new, self-funding catastrophic fund to protect taxpayers from having to bail out another housing collapse during the 10-year transition period before privatization

Pays back the American taxpayer for the cost of the Fannie Mae and Freddie Mac bailout

Shuts down the new transitional program completely within 10 years and turns it over fully to the private sector

Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County, Ga., office of a small, family-owned real estate business, Northside Realty. Isakson later served as president of Northside for 20 years, presiding over the company’s growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America.

12 comments

  1. Why do I have the HUGE suspicion this is more of a “repeal and replace” sort of thing. As in, the programs/government guarantees stay in place, just different beneficiaries (like those that benefited directly from TARP), hmmmm?

    • Charlie says:

      Why do I always have the HUGE suspicion that the members of the political party who always say that they want to privitize non-governmental functions are always the first ones to criticize any actual proposal to do that?

      • CobbGOPer says:

        Perhaps because those proposals always seem to end up benefiting someone or some company unfairly without ever really addressing the root problem.

        • BINGO!!!!!!
          Like calling something “free-market”, “de-regulated” or “privatized”, but it isn’t, really…. just different colored smoke and better mirrors.

        • John Konop says:

          David,

          In all due respect had we not had the bailout who do think would of been left holding the bag with all the loans and deposits at the failed banks that the government backed? Do you understand the majority of housing loans FHA, VA…….are 90% backed by tax payers? I warned about this problem pre the massive blow-up. But with that said you cannot just hire Dorothy and have her click your heals 3 times and hope your way out. We must deal with what we inherited and fix the problem without totally crashing the economy.

        • saltycracker says:

          Isakson sponsored the “first time home buyers” multi-billion dollar handouts – more than a trick named a tax break….a handout…. and he would have made it more to $15,000 & eliminated the $150k @ couple income ceiling if he could have……

  2. 22bons says:

    In general, an orderly transition from a public to a private market is exactly what is needed. And 10 years sounds about right to me — not so fast as to disrupt markets, but not too long. The continuing uncertainty in housing finance is doing a great deal of harm and this could help fix that without an unnecessary and ill timed shock. I look forward to the details but trust Johnny’s judgement on this. I had a very short, but to the point conversation with him about this over a year ago and it’s nice to see something actually happening.

  3. gcp says:

    Agree Fannie and Freddie should be eliminated but always beware of the details. Remember Mr. Isakson was a supporter of the wasteful $26 billion home buyer tax credit. Also how about if government exits the real estate business entirely. Eliminate FHA guaranteed mortgages, the interest deduction on mortgages and flatten the income tax.

  4. jiminga says:

    I think the big question should revolve around this. The FDIC was supposed to be self funded through fees paid by banks and is now broke and dependent on tax dollars and a “credit line” from the Treasury. There’s no reason to believe a replacement for Freddie and Fannie would be any different. after all, this is Washington.

  5. saltycracker says:

    Wouldn’t trust Isakson anywhere near a law involving real estate.

    Wouldn’t a first step to pave the way out of Fannie & Freddie to be to rewrite the banking laws and types of banks ?

    Savings & Loans
    Credit Unions
    Investment Banks
    Commercial Banks

    FDIC available only in Savings & Loan Banks and Credit Unions.

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