Why Does Reform of Fannie and Freddie Have to Mean More Profits for the Banks?

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Thursday, 13 June 2013 05:21

The government gives direct student loans. This saves money by eliminating the financial intermediaries. Is there some reason that it can't do the same with mortgages, that is a reason other than banks need to rip off the public with the government's assistance?

Jesse Eisinger has a good piece pointing out that the most politically likely paths for reforming Fannie Mae and Freddie Mac are likely to mean big profits for banks and incorporate few of the lessons from the housing bubble.