Obviously, the A, E, I, M, S, and O groups will be larger than those for surnames starting with Q, X, and Z. The Q, X, and Z companies will be smaller, and thus cheaper, than the others. Thus, these 26 separate asset classes could be sold at a range of prices, which would make them affordable to market players of various sizes.
These 26 companies should be sold to the highest bidders in open outcry auctions accessible to the general public and members of the news media.
Fifth, once banks, hedge funds, private-equity companies, pension funds, or whoever purchases these assets, the new owners will be responsible for contacting mortgage holders and making payment arrangements. For many, it simply will mean giving them new addresses to which to direct their monthly checks. Other people will need to work out payment terms or take other actions to normalize their affairs.
Even if these loans need to be untangled and “de-securitized” in order to compensate various intermediaries between original borrowers and the winners of these auctions, far better to let 26 flowers bloom and manage this challenge privately than to leave a financial Katrina in the lap of the corrupt, spendthrift incompetents who are a nickel a dozen in Washington, D.C.
Meanwhile, the new private “landlords” who run these 26 new companies will have an instant audience of homeowners to whom they can market insurance, roofing supplies, lawn care products, air conditioners, steak knives, or anything else homeowners may want to buy. If these companies can make money this way, more power to them. The prospect of former Fannie and Freddie customers suddenly getting junk mail about the latest innovations in attic insulation may not be immediately appealing. But far better an outpouring of catalogues and coupons than the outrage of watching Uncle Sam toss 200 billion of our hard-earned tax dollars onto a giant bonfire.
Sixth, once these 26 alphabetically divided former components of Fannie Mae and Freddie Mac are sold off, the Asset Breakup Corporation will expire, 90 days after it was born.
At that point, the U.S. federal government should declare itself out of the home mortgage business, once and for all. Having made a Doberman’s breakfast of things, Uncle Sam should walk away and redouble his efforts to keep our borders safe and kill Islamic terrorists before they try to kill us.
– New York commentator Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution.