The rise of a new Fannie, Freddie?

For all the mismanagement that plagued the GSEs, they really did what they were supposed to. They expanded homeownership in America. And by moving into subprimes and other non-prime loans, they ended up greasing the wheels of the real estate economy a bit too much. Of course, they were pressured to do this, but shouldn't they still have raised more capital? All of which begs the question: Should they exist at all? Is this sort of "insuring" and "backing" activity something that ought to be purely the domain of a private company? Is the mixed economy, public-private approach still the best? Should a pure government agency take over this function? It's tempting to argue that the GSEs worked well but lacked oversight. Good management is hard to come by. But I'm not sure the fact that they were poorly managed means they should not exist going forward. What do you think?

For more:
- here's a New York Times article
- Treasury Secretary flexes his muscles. Article

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