At Cong. hearings
yesterday on Fannie Mae and Freddie Mac, Alan "The Fountainhead" Greenspan announced that he supported "more regulation" of both but said that "it shouldn't depress housing/mortgage market."
Folks, this is really terrible news. Low mortgage rates are supported by Fannie and Freddie's ability to buy and hold lots of mortgages(and to package `em into mortgage backed securities). Tightening up ability of Fannie and Freddie to do this means tightening up the mortgage market. And, tightening up the market could be just what it takes to prick the housing bubble and really send the economy into a tailspin.
The only reason I see that Greenspan is doing this is political. It is a long story but Fannie Mae's board is still dominated mostly by Dems. The recent scandal -- where it turned out that Fannie like AIG was flattening out revenue streams to raise their stock price -- sent CEO Franklin Raines packing but left many other Dems on the board.
The GOPs -- I've long guessed -- want to purge this last big money, political source of influence and Greenspan comes through for them again.
It is amazing, the willingness of the "pro-business" side of the party to sacrifice economic growth and well being for political dominance. First, there was Greenspan's endorsement of tax relief and massive deficits which has resulted in lowering of the dollar and increased inflation. Second, there was Greenspan's endorsement of borrowing another $2 Trillion to privatize social security (and further pushed the dollar down) and now this -- going after the mortgage market. And, I don't know if any else shares this gripe, but as a former dotcommer, I was amazed that Bush stood by and did nothing as the tech market crashed (Gore would have at least given a speech).
Trust me folks, Fannie Mae and Freddie Mac may sound like boring, remote entities but -- the GOPs plans to attack them -- could cause the value of your house to go down real soon. Add that to the decreased real value of your salary (thanks to increased inflation) and you have a really nice quality of life scenario.