Cut 'Em Loose With No Government Props

The Trump Administration is seriously considering privatizing Fannie Mae and Freddie Mac. It's long past time that it did this. The business of these two giants is to bundle and sell mortgages to investors with a government guarantee.

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That is, investors are covered if there are losses because of homeowner defaults.

Washington, via the Federal Housing Finance Agency, took control of both entities in 2008 because of their massive losses. The seizures were called "conservatorships." The takeover was supposed to be temporary, yet here we are nearly a generation later, and the conservatorships are still intact.

Fannie and Freddie are the elephants in the housing market, backing some $7 trillion in mortgages. They have an eye-popping line of credit with the Treasury Department of $254 billion. They charge a so-called guarantee fee of around two-thirds of 1% on each mortgage. Fannie tends to work with larger financial institutions, while Freddie goes with smaller ones. It's a nice business. As President Trump noted, they are gushing cash.