Proponents of the "recap and release" proposal claim homeowners and taxpayers would benefit if the federal government ceded control of the mortgage finance giants to private shareholders.
Just the opposite is true. Recap and release could raise the cost of mortgages for Americans, and potentially expose taxpayers to another painful bailout.
Seven years ago, Fannie and Freddie were on the brink of insolvency and were placed into conservatorship by the Federal Housing Finance Agency. In what became the largest financial rescue in history, the U.S. Treasury injected $188 billion in capital and committed to providing another $258 billion if needed. These measures, along with the administration's broader rescue efforts, helped stabilize the housing market and lay the groundwork for the recovery. The programs kept millions of Americans in their homes and reduced their mortgage payments.