The Trump administration’s bold move to pull Fannie Mae and Freddie Mac out of government conservatorship has rattled the housing world—and predictably sent the left into a tizzy. These two government-sponsored enterprises, or GSEs, have been sitting on the taxpayers’ balance sheet since 2008, soaking up subsidies and ensuring that any whiff of competition in the mortgage market is snuffed out before it begins. Trump’s plan? Bring back accountability, privatize these bloated institutions, and finally free the housing market from the heavy hand of government control.
Let’s not forget, Fannie and Freddie guarantee about 70% of U.S. mortgages. They buy loans from lenders, package them into securities, and sell them to investors, keeping the mortgage machine humming. Sounds harmless, right? Not so fast. This cozy arrangement gives them an unfair edge, backed by an implicit government guarantee. In other words, taxpayers are still on the hook if these institutions mismanage their funds or fall into another financial crisis.
Former Federal Housing Finance Agency (FHFA) director Mark Calabria has been sounding the alarm on this issue for years. At a 2019 conference, he made it clear that conservatorship wasn’t supposed to be a permanent vacation. “We fix the problem and they move on,” Calabria said, emphasizing the need to break up this duopoly. He’s right. Fannie and Freddie have become a crutch for the housing market, stifling innovation and sticking taxpayers with the bill.
Naturally, critics are lining up to decry the plan, claiming it will send mortgage rates soaring and home prices plummeting. Moody’s economist Mark Zandi, who always seems ready to predict doom whenever conservative policies are floated, has warned rates could spike to over 7%. Of course, these are the same scare tactics we hear anytime reform is proposed. Meanwhile, mortgage rates are already near 7% under the Biden administration’s disastrous economic policies, and housing affordability has cratered.
The median home price now sits at $422,100, and inventory is still below what’s needed to meet demand. Yet Democrats have done nothing to address the root causes of this crisis—too much red tape, not enough supply, and an economy strangled by inflationary spending. Instead, they’re too busy wringing their hands over the supposed risks of privatization while ignoring the very real taxpayer risks of keeping Fannie and Freddie under government control.
Trump’s plan cuts through the noise. By freeing Fannie and Freddie, the housing market can attract private capital and introduce much-needed competition. This will reduce taxpayer exposure, improve efficiency, and ultimately lead to a more dynamic and resilient housing market. Democrats, of course, hate the idea. They thrive on centralizing power and keeping Americans dependent on government programs. A freer, fairer housing market? That’s a nightmare for their big-government fantasies.
The left can cry foul all they want, but the American people know better. They’ve seen what happens when government gets too cozy with big institutions—it’s Main Street that pays the price. Trump’s administration is stepping in to fix a broken system, and once again, it’s the Democrats who are standing in the way of progress.
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