The US housing finance system works just fine

From Mr Chris Lafakis.

Sir, Edward Luce (“Hedge funds are testing the quality of US democracy” (Comment, May 12) paints the investors’ lawsuit against the US government on Fannie Mae and Freddie Mac as a righteous struggle between noble American democracy and the evil lords of Wall Street. Should we not question the authority of the US government to confiscate the profits of any company, including one that it bailed out, by fiat decree?

The US government would not have dared to do this to AIG because it knows it would have lost in court. Banks, regulators and Congress were just as indispensable to the financial crisis as the government-sponsored enterprises. So why should the GSEs alone be taken to task?More

I

Mr Luce and virtually every commentator or politician who opines on this issue, including President Barack Obama, wants the US to unilaterally disarm one of its greatest sources of comparative advantage: cheap, 30-year mortgages predicated on the full faith and credit of the US government and the dollar’s role as global reserve currency.

The GSEs have repaid every penny they borrowed. In the teeth of the crisis, no one thought this possible. The system worked. It does not need to be “reformed”.

Chris Lafakis, West Chester, PA, US