Sunday, July 26, 2009

Girls Are Better Then Boys.

Lets take a look at Ginnie Mae which never had the credit problems that FNMA/FRE had. GNMA is a private company owned by HUD. Its not a Government Sponsored Entity like FNMA/FRE. GNMA has never been a publicly traded company, thus never had the pressure to hit the numbers.

Unlike FNMA/FRE the debt and guaranties of GNMA are direct obligations of the Treasury. There is absolutely no argument over this. GNMA is able to issue MBS Debt with a guarantee at a lower cost than the GSE's. Also GNMA actually had people with brains working their thus GNMA did not fall into the trap of bad credit in the 2004-2007 vintage period that ultimately murdered FNMA/FRE/Taxpayer.

What I am trying to say is GNMA did what a government mortgage agency should have done. They made loans based on a fiduciary responsibility towards the tax payer. They made loans based on real facts. They supported the mortgage market and protected the Treasury and thus the Tax Payer.

I say close the boys (FNMA/FRE) down. And give the Girls (GNMA) more responsibility going forward.

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