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John Carney’s Plan For Banks To Replace Fannie Mae …Because Nothing Will Go Wrong With That Idea

n his piece in yesterday's Wall Street Journal headlined "Banks Rediscover Their Homing Instinct," John Carney is making the case for getting rid of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) as guarantors of mortgages, reasoning that the big banks will step in to fill the gap. You know, those same banks that are being fined hundreds of millions of dollars for mortgage fraud. Not surprisingly, Carney leaves this part out of his analysis.

Carney's analysis of the share of U.S. mortgages held by the banks notes that the "long-term trend of banks unloading mortgages has reversed," which will help banks and hurt the Fannie Mae and Freddie Mac.

He calls this "boring banking." We call it putting the dream of home ownership into the hands of a privileged few who can meet the banks' standards.

Here's a bit of Carney's reasoning:

"Notably, banks began adding...


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