Holy Sacred Cows! USA Today Reporter Takes on GSEs

August 11th, 2010 2:56 PM

Are the media blindfolds about the previously sacrosanct Fannie Mae and Freddy Mac starting to fall off?

In an August 11 USA Today story, reporter Paul Wiseman laid out the nation’s mortgage problems and called for the reformation of government sponsored entities (GSEs) Fannie Mae and Freddie Mac. Given the media’s traditional  lack of interest in the GSEs, Wiseman’s report was welcomed to anyone (mostly Republicans) who has been calling for GSE reformation for years:

“When housing prices collapsed, Fannie and Freddie were sitting on huge losses. The government seized the two companies, making explicit Uncle Sam's implicit guarantee. Geithner says regulators couldn't just let the mortgage giants fail without risking "devastating consequences for the housing finance system and the broader economy."

Wiseman acknowledged that “tinkering with housing finance is like playing with political dynamite” but his story is about ten years too late. Media outlets such as the Wall Street Journal warned about inflated housing prices as early as 2004 yet their warnings fell on deaf ears in Washington.

Additionally, Wiseman stated how long term, fixed mortgage rates need reforming because they “only make sense if the government is absorbing some of the risk.” Wiseman added the government should “shift the emphasis away from encouraging homeownership and toward helping low-income families find affordable apartments to rent.”

Wiseman also broke media precedent by crediting Republicans for calling out the White House for not addressing the GSEs in the financial reform bill: “They [Republicans] say the White House squandered an opportunity to deal with what they see as the No. 1 problem — limiting taxpayer losses on Fannie Mae and Freddie Mac — in an overhaul of financial regulations Congress passed last month.”

The majority of the media vilified Republicans for holding up financial reform instead of questioning the legislation’s exclusion of the GSEs. With both GSEs requesting billions more in government money, Wiseman’s article is perhaps ten years too late, but hopefully others in the media will stop ignoring the GSEs culpability and begin challenging them and the liberal legislators who protect them.