Duopoly is Dead

http://m.whitehouse.gov/the-press-office/2015/01/07/fact-sheet-making-homeownership-more-accessible-and-sustainable

“Lay the foundation of a stronger housing finance system for middle class families and economic stability. The President believes it is time to turn the page on the flaws of the past and build a new sustainable housing finance system that will provide a path to secure homeownership for responsible middle class families. The President continues to support long-term reform centered on several core principles: require more private capital in the system; end the failed Fannie/Freddie duopoly business model in order to improve system stability and better protect taxpayers; ensure broad access for all creditworthy families to sustainable products like the 30-year fixed rate mortgage in good times and bad; and help ensure sustainable rental options are widely available. As in the past, the President stands ready to work with members of Congress in both parties to enact commonsense housing finance legislation based on these core principles.”

The common security, securities platform, higher guarantees, reduced portfolios, etc. are all efforts to level the playing field to make Freddie more competitive with Fannie and FHA as competitive as both and allows “private” capital to play a role, i.e. “end the failed duopoly.” It’s done.

I thought President Obama would focus on FHA in the speech tomorrow and it seems like he will based on the release.

It would be hard for the President to completely push the advantages of FHA (Ginnie Mae), which is 100% explicit US Gov guarantee, then state that Fan and Fred should be eliminated due to the so-called implicit guarantee…

As I stated in one of my earlier posts, the US Gov ceased Fan and Fred in order to make the necessary adjustment so FHA could become more competitive. It’s a lucrative business and the Gov wants more of these profits.

So, ok…Fan and Fred are no longer a duopoly and FHA is now more competitive. Time to end C-ship!

Perhaps we should also consider ending the failed Democratic/Republican duopoly business model…

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