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  The Trump administration’s new plan to privatize Fannie Mae and Freddie Mac, explained
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Last EditedRP  Sep 09, 2019 08:32am
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AuthorMatthew Yglesias
News DateMonday, September 9, 2019 02:00:00 PM UTC0:0
DescriptionThe Trump administration has a new plan to re-privatize the mortgage groups Fannie Mae and Freddie Mac — reversing one of the first actions taken to address the 2008 financial crisis and raising the prospect of a fundamental reworking of the multi-trillion-dollar market in mortgage-backed securities. The plan is on the table in part because the 2008 nationalization was a stopgap measure that few really wanted.

Treasury Secretary Steve Mnuchin’s blueprint would abandon that libertarian dream, seeking instead to take Fannie and Freddie out of public control while minimizing disruption to the mortgage market. That means formally admitting that these companies will be bailed-out again if they get into trouble, with a new regulatory structure designed to prevent those bailouts from being costly to taxpayers.

This raises the big picture question of why bother to go through privatization at all if the goal is mostly to keep things the same. Hanging over that question is the struggle of a handful of hedge fund managers (several of whom are allied to President Donald Trump) to secure a huge payday for themselves. The Treasury blueprint leaves that topic — and several other crucial related ones — hazy, even while including a somewhat detailed wish list of unrelated conservative regulatory reforms.
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