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While the Obama administration has punted into next year any decision on how to reform the housing finance giants, there's no shortage of opinion about what should be done.

Today's Viewpoint by Barry Zigas, director of housing policy at the Consumer Federation of America in Washington and a senior vice president at Fannie Mae from 1995 to 2006, argues that Fannie and Freddie made serious mistakes during the housing boom. "But with the government’s intervention, they have done the most important thing they were created for: maintaining a working mortgage system and keeping many struggling borrowers in their homes."

In January, House Financial Services Committee Chairman Barney Frank said he supports "abolishing Fannie Mae and Freddie Mac in their present form and coming up with a whole new system of housing finance."

James B. Lockhart III, who ran the Federal Housing Finance Agency and its predecessor agency from 2006 until August 2009, said in an interview with Bloomberg Television last month that the U.S. investment in Fannie Mae and Freddie Mac may be too deep to effectively transition the mortgage-finance companies out of government control and back into the hands of private investors.

And in his recently released book, Henry Paulson, the former Treasury Secretary offers his prescription for what to do with Fannie and Freddie over the long-term: shrink them, dial down their focus on housing mission-related goals, and using a public-utility model, turn the firms into mortgage-credit guarantors that provide a credit guarantee on certain mortgages and mortgage-backed securities that have an explicit federal backing

In an online poll about the proper role for a housing GSE, 43% of respondents said they should have no role - housing should be left to market forces. Twenty-eight percent said a GSE should guarantee loans for creditworthy borrowers, regardless of financial need, but should not hold mortgages; 22% said a GSE should both guarantee loans for creditworthy borrowers, regardless of need and hold MBS; while 7% said a GSE should use loan guarantees only to aid low- and moderate-income borrowers.   

What do you think the proper role of a housing GSE is? Post a comment below.  

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