Mae We Correct the Record?

Fannie had a social mission first and a private one second

The Fannie/Freddie Fiasco is bad enough without news outlets letting politicians mangle their history.

In reporting the two parties’ positions on the GSE’s future, the Journal, for instance, lets a misstatement stand:

The future of Fannie and Freddie’s social mission is at the heart of a debate brewing in Congress over the fate of the two companies. Democrats invoke the goals in defending the companies against critics.

But some Republicans say the two companies should be privatized and their social mandates ended. “There is no validity in taking a for-profit private company and forcing a nonprofit social mission on it,” says Texas Rep. Jeb Hensarling. (emphasis ours) “We already have the [Department of Housing and Urban Development] that has 90 programs with either a housing or urban-development mission.”

Congressman Doofus has it exactly backwards. Leaving aside the relevance of Section Eight and other HUD programs to the mortgage giants that hold up the global bond market, Fannie Mae started as a government program with a clear social mission— lowering housing costs. It didn’t seem to bother anybody until Lyndon Johnson sold it to investors in 1968 to pay for a war and clean up the government’s books (Freddie Mac was created two years later as a publicly traded hybrid).

So, to be clear: The public chicken came first. The shareholder egg came later and scrambled everything. If anything, Fannie and Freddie are an argument against privatization.

The press already hasn’t done a good enough job making it plain that these entities, for all their flaws, are not at the center of the mortgage mess. But how about a sentence clearing up the record when a public official gets something ass-backwards?

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.