Questions: “It’s time to end the bailout of Fannie and Freddie”

The following may sound good, but exactly what would the “strict regulation” be and how would it be enforced?

Without special privileges, the firms should be forced to compete with other private companies willing to pay the government for its reinsurance, with strict regulation to ensure that community banks can originate and securitize mortgages on an even playing field with the giant banks that have come to dominate the business in the past four years. Such competition will spur innovation and reduce systemic risk in mortgage securitization. As the system spurs new entrants in mortgage finance, any one of them can fail — including the new Fannie and Freddie — without the threat of a housing market collapse.

via It’s time to end the bailout of Fannie and Freddie. Here’s how. – The Washington Post.

Regulations were dismantled leading to the crash in the first place. Had they not been, the issues concerning Fannie and Freddie would be moot, would they not?

Fannie and Freddie have discovered that many of the mortgages presented to them to insure were done so fraudulently and both are continuing to force those who engaged in the deception to repay them, Fannie and Freddie. If the system is overhauled with proper regulations, why should Fannie and Freddie be privatized? Why should the people be forced back into overkill on mortgage standards that were designed for the pre-regulation era?

The withdrawal of regulations caused the problems. Why not simply re-regulate back to where things were before deregulation allowed for the Wall Street excesses of the deregulators and fraud that led directly to the real estate bubble and crash? Why throw the baby out with the bathwater?

Here’s some additional food for thought:

Today’s low mortgage rates aren’t for everyone

Mortgage fraud must be stopped

A New Assault On Mortgage Fraud