Mortgage Titans' Future Thrust Into Partisan Debate

Wall Street Journal (09/09/08) P. A21; Paletta, Damian
While the restructuring of Fannie Mae and Freddie Mac will be the job of Congress and the new president, already lawmakers are debating the future of the companies and the government's role in the housing market. Sen. John McCain, R-Ariz., and other top Republicans argue that Fannie Mae and Freddie Mac should be downsized, divided into smaller companies and privatized to minimize risks; while Senate Banking Committee Chairman Christopher Dodd, D-Conn., and other high-ranking Democrats contend that severing all government ties to the companies could boost mortgage costs dramatically. According to former Treasury secretary Lawrence Summers, "I think these decisions need to be made carefully and deliberately rather than on the basis of any kind of ideological slogan, and certainly the disastrous performance of both the subprime and jumbo markets, where there was no government involvement, needs to be kept in mind in setting the course."