Bond king wants to nationalize Fannie; Wells Fargo wants permanent TARP 

President Obama — and much of the media — would have you believe that financial giants simply want to be left alone. That’s hogwash, and a Bloomberg story today shows some good examples. The bright side of the story: the Obama administration sounds legitimately anti-bailout here.

First, there’s the bond industry’s call for making Fannie and Freddie government agencies:

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the mortgage- finance system ….

“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said today at a U.S. Treasury Department conference in Washington. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.”

Then there’s the mortgage industry’s call for a permanent TARP:

An explicit government guarantee against catastrophic losses could help attract private capital, said Mike Heid, co- president of Wells Fargo Home Mortgage.

Compared to HUD Secretary Shaun Donovan’s nearly free-market stance:

“The government’s footprint in the housing market needs to be smaller than it is today,”

And Geithner sounding the same note:

“We need to begin the process of weaning the markets away from government programs and make room for the private sector to get back into the business of providing mortgages,”

But don’t get too excited about TurboTax Tim’s belief in markets:

“We need to continue working to keep overall mortgage rates reasonably priced.”

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Staff Report

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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