Fannie & Freddie: Complain or Commend?

Including this most recent request, Fannie Mae will have received more than $84.6 billion from the government, and the firm said it saw no end in sight to federal assistance. Republicans like Alabama Senator Shelby have blamed the agencies, and by extension the current administration, for the collapse of the economy. Yet, Fannie and Freddie’s mission is to make housing affordable for Americans. Solely blaming them for carrying out their mission is hardly fair, nor is it a solution to the problem.  While politicians wag their tongues, people continue to lose their homes, and these two agencies continue to lose money.  We can sit here and blame them, or the banks who made loans they knew they wouldn’t keep on their balance sheets, or mortgage brokers who rattled off commission after commission telling customers to falsify information on their applications, or homeowners themselves for living beyond their means and not saving for the future.  None of that will solve the problem.

Ironically, those who are now running the agencies are the only ones actually attempting to solve the problem.  Yet, we want to blame them for inheriting such a catastrophic mess, and then tell them what they should be paid for fixing our collective problem.  Similarly to a President who inherits a problem from a former administration (Nixon with Vietnam and Obama with financial reform and the War on Terror both come to mind), it is not the fallout from an inherited problem that we should judge them for, but the decisions they make moving forward regarding how to address and solve those problems.

We live in a capitalistic society.  If we want someone to do a job, we need to incentivize them to do it.  If you had a big pile of shit you wanted to remove from your front yard as soon as possible, would you tell your gardener you’ll give him a bonus if he does it quickly and efficiently, or would you yell at him simply because the pile of shit exists in the first place, and then complain that he is making too much money?