10:19 AM » Fannie, Freddie, Zombie
Here's the financial equivalent of the popular Twilight vampire franchise: Politicians are sucking the blood out of resurgent mortgage guarantors Fannie Mae and Freddie Mac rather than returning them in good health to the private sector, where they belong. Washington is using their money in its budget-cap games, leaving the duo in a state of perpetual weakness, like the living dead, imprisoned in the government's ill-named "conservatorship" program. A number of profit-minded investors that have taken positions in the preferred shares of the formerly distressed mortgage companies are pushing an alternative. The politicians, they claim, are blowing an opportunity both to generate at least $100 billion in deficit reduction from a spinoff to the public and to significantly limit the government's footprint in the mortgage market. Recall that in last month's budget, President Barack Obama took a huge political risk in calling for the sale of the government-owned Tennessee Valley Authority for about $25 billion to help reduce the deficit.