Ponder This: Anne Eberhardt of Gavin/Solmonese Discusses Fannie & Freddie Mac

This week we welcome Anne Eberhardt, a Senior Director at Gavin/Solmonese, a Delaware-based financial advisory firm. We previously featured Anne in a “Notice of Appearance” segment that very much resonated with PETITION readers and so we invited her back to share some new thoughts. Here is the latest from Anne:

Ten years ago, the U.S. Treasury rescued Fannie Mae and Freddie Mac from the financial apocalypse, placing them in conservatorship and mandating Treasury-financed draws for any balance sheet deficits they incurred. These draws were originally subject to a 10 percent dividend but, in 2012, when Fannie and Freddie began returning to profitability, Treasury changed the terms to require a quarterly sweep of net worth, which critics charged was a ploy to help fund the government’s deficit spending.

Fannie and Freddie were always strange beasts – hybrid entities with public shareholders but also a Congressional charter to implement public policy encouraging home ownership - that most sacred of cows, the fullest expression of the American Dream. When, in the depths of the Great Depression, Congress created Fannie Mae, cynics could be forgiven for arguing it was a direct response to the Bolshevist challenge, a latter-day opiate of the masses. How could the average proletarian foment revolution against his capitalist oppressors when he has to mow the lawn, clean the gutters, and paint the trim?

As Fannie and Freddie lurch zombielike into their second decade of conservatorship, the number of legislators eager to attach their name to the End the American Dream Act is roughly zero. But it bears asking whether housing will – or indeed should – continue to occupy its exalted place in American life, and what role the federal government should play in guaranteeing practically all of the mortgages that are made in this country.