Magazine asks, ‘Do we really need Fannie and Freddie?’

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Links of note: From the New Yorker via Patrick.net: The New Yorker’s thoughtful economics essayist, James Surowiecki, observes that Fannie Mae and Freddie Mac ‘became reckless’ with other people’s money, notes they have little impact on mortgage rates and asks whether we really need them any more: ‘The government already offers homeowners a subsidy, in the form of a mortgage tax break. Given everything else we could be spending taxpayer money on, does the government really need to be in the mortgage-buying business, too?’

Freddie Mac, by the way, today reported a loss of $821 million in the second quarter, much worse than Wall Street expected.

Elsewhere, the Wall Street Journal goes where the L.A. Times went earlier in the week, profiling L.A.-based FirstFed Financial. As Mark Lacter writes at LA Biz Observed, ‘Both pieces, written in advance of earnings results this week, are mainly sympathetic to the company’s big problem: how to handle the raft of pay option mortgages from a few years back.’

Update on FirstFed: Those earnings (losings) are now out, and the company today reported a quarterly loss of $35.5 million, which Thomson Financial says is in line with analyst expectations.

--Peter Viles
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