Reining in Fannie & Freddie

The FT reports that the White House is planning cutting back the role of Fannie Mae and Freddie Mac in the housing market.

FT reports today that the Obama administration is planning on cutting back on the role of Fannie Mae and Freddie Mac in the housing market. The administration wants to lower the cap on government-insurable mortgages from the current nearly $730, 000. It is also considering raising the fees charged by Fannie & Freddie, thus rendering them less competitive with private entities. These are ideas advanced by free-market housing reformers in the 1990s and 2000s, to tragically little effect. Interesting to see them now being pushed by a Democratic administration. And perhaps a hopeful indication that America will emerge from this horrific depression more streamlined, more efficient, more competitive after all.

If this mortgage reform occurs, place it alongside the shrinkage of state & local government employment, and the increase in the household savings rate as a predicate of better days ahead.