As the media has reported the mortgage giants, Freddie Mac and Fannie Mae, were recently placed in conservatorship by the Federal Government. First, what are Freddie Mac and Fannie Mae?
According to Wikipedia:
The Federal Home Loan Mortgage Corporation (FHLMC) (NYSE: FRE), commonly known as Freddie Mac, is a privately-owned and run government sponsored enterprise (GSE) of the United States federal government. It is a stockholder-owned corporation, authorized to make loans and loan guarantees.
http://en.wikipedia.org/wiki/Freddie_Mac
The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a publicly owned government sponsored enterprise (GSE). It is a stockholder-owned corporation authorized to make loans and loan guarantees.
http://en.wikipedia.org/wiki/Fannie_Mae
Both enterprises play a major role in the US housing market. According to Wiki, “As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the U.S.'s $12 trillion mortgage market.”
Now that the Federal government is managing these enterprises how should it proceed? There are several good options:
State Agency: One good option is to convert them both into government agencies. By doing so, the government can insure that everyone has access to good, affordable housing.
Worker Cooperatives: Rather than make these enterprises government agencies another good possibility is to give them to the workers of those agencies in the form of worker-owned cooperatives. These co-ops could be chartered as non-profits with mandates to insure quality housing for everyone.
There is a difference between how the government should proceed and how it will. The problem is that the federal government is highly unlikely to keep them as state agencies and is certainly not going to make give them back to the workers.
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