The hole at the corner of 15th and L streets, in downtown Washington, is deep — and getting deeper.
Earth-movers there are laying the foundations of a shiny new headquarters for Fannie Mae, the bailed-out giant of American mortgages.
But the sleek design, replete with glass sky bridges, belies a sober reality: Fannie Mae and its cousin, Freddie Mac, are once again headed for trouble.
In fact, there’s almost no way around it. On Jan. 1, 2018, the two government-sponsored enterprises will officially run out of capital under the current terms of their bailout. After that, any losses would be shouldered by taxpayers.
Granted, few people are predicting a disaster like the one in 2008, when the GSEs had to be thrown a $187.5 billion federal lifeline. But eight years later, people still don’t agree on what to do with these wards of the state. In Washington and on Wall Street, the fight over Fannie and Freddie drags on.
“Everyone agreed that this was a broken business model that made no sense,” said Douglas Holtz-Eakin, president of the American Action Forum, a center-right advocacy group in Washington. “Now, inertia is driving the …read more
Source:: U.S. Rep. Ed Royce