From the New York Times:
In a speech on Tuesday, President Obama signaled that Washington may finally be returning to the place where the financial crisis started. With the housing market on the mend, Mr. Obama said it was time to “wind down” Fannie Mae and Freddie Mac.
For all the talk, however, it will be difficult to alter the government’s role in housing finance, which has remained substantially unchanged for half a century — notwithstanding Fannie and Freddie’s move from informal to formal wards of the state. That is because Americans like cheap mortgage loans and it is hard to preserve the benefits without the costs of the current system.
The real challenge is drafting a replacement. The terms of the government’s involvement in housing finance have remained substantially unchanged because the benefits are wildly popular with powerful interest groups, including banks, builders, real estate agents — and, of course, homeowners.
Previous generations of politicians created Fannie and Freddie as a means of providing those benefits while pretending the costs did not exist. The companies were declared to be private during the fat years, and their shareholders profited handsomely, even as everyone understood that the government would stand behind the companies during the lean years.
That strategy has probably been exhausted, as Washington appears to have lost its appetite for implicit guarantees.
That leaves an unpalatable choice between making the cost of the system an explicit government obligation, or making it harder for Americans to buy homes. Any reduction in government support for the mortgage market is likely to increase the cost of home borrowing.
Classic hallmarks of addiction include impaired control over substances or behavior, preoccupation with substance or behavior, continued use despite consequences, and denial. Habits and patterns associated with addiction are typically characterized by immediate gratification (short-term reward), coupled with delayed deleterious effects (long-term costs).
Physiological dependence occurs when the body has to adjust to the substance by incorporating the substance into its 'normal' functioning. This state creates the conditions of tolerance and withdrawal. Tolerance is the process by which the body continually adapts to the substance and requires increasingly larger amounts to achieve the original effects. Withdrawal refers to physical and psychological symptoms experienced when reducing or discontinuing a substance that the body has become dependent on. Symptoms of withdrawal generally include but are not limited to anxiety, irritability, intense cravings for the substance, nausea, hallucinations, headaches, cold sweats, and tremors.