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Tim Carney: Bank of America CEO wants slow unwind of Fannie & Freddie

December 17, 2012 | 4:58 pm
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Photo - WASHINGTON, DC - DECEMBER 14:  Bank of America CEO Brian Moynihan speaks at the Brookings Institution December 14, 2012 in Washington, DC. Moynihan spoke on the topic of "The Future of Homeownership in the United States."  (Photo by Win McNamee/Getty Images)
WASHINGTON, DC - DECEMBER 14: Bank of America CEO Brian Moynihan speaks at the Brookings Institution December 14, 2012 in Washington, DC. Moynihan spoke on the topic of "The Future of Homeownership in the United States." (Photo by Win McNamee/Getty Images)

Bank of America CEO and Barney Frank donor Brian Moynihan said last Friday that eventually the financial industry should bear its own risk on mortgages — but not until the 2020s or 2030s.

Fannie Mae and Freddie Mac spent decades propping up the mortgage industry by buying mortgages from banks. All along, Democratic politicians — particularly top Financial Services Committee Democrat Barney Frank — insisted that Fannie and Freddie were real corporations, and that taxpayers wouldn’t be on the hook when they collapsed.

Then, in 2008, Fannie and Freddie collapsed. The federal government came in and bought the government-sponsored enterprises, and have poured more than $140 billion into keeping them solvent. These are taxpayer subsidies to banks like Bank of America.

American Banker had this report:

Moynihan said that ultimately the country should move to minimize the roles of Fannie Mae and Freddie Mac, which have dominated the market since the financial crisis, but warned that an overhaul of the government-sponsored enterprises will have to be methodical and could take “a decade or two transition” to complete.

Republicans have pushed for privatizing the market for years, including incoming House Financial Services Chairman Jeb Hensarling, R-Texas, who is expected to make the issue a priority next year.

“In the near term there’s no practical solution other than to continue to participate in the government….”

Remember this next time Barack Obama implies that Big Banks’ agenda is one of eliminating government.

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