NEW YORK ( TheStreet) -- Government sponsored enterprises Fannie Mae (FNMA) and Freddie Mac (FMCC) may be Republicans' favorite villain, but if Mitt Romney makes it to the White House they could find themselves with a new ally.
According to a popular Republican narrative, the government forced banks to lend to people who couldn't possibly pay their mortgages, with Fannie and Freddie providing much of the capital. The result was a corrupt scheme to buy votes through dangerously risky home loans while lining the pockets of powerful Democrats.
The Obama Administration has signaled a desire to wind down the GSEs, though since they are pretty much single-handedly supporting the fragile U.S. housing market at the moment, no one wants to move too quickly. As a result, four years after the mortgage giants were placed under government conservatorship, we still have little more than a few vague proposals about what to do with them.
Anyone who thinks a Romney Administration would be faster to phase out the GSEs should think again, however, according to Brian Gardner, analyst at Keefe, Bruyette & Woods. Speaking at a KBW conference on Wednesday, Gardner argued Romney would most likely be slower than Obama to address the GSEs, since "no sitting President running for reelection is going to touch the issue."In other words, if Obama wins, he may have the courage to take on the GSE question because he won't have to face reelection, while if Romney were elected he would probably wait until his second term--assuming he has one--in 2017. Republicans who want the government out of the housing market will either have to reduce their expectations or vote for Obama. -- Written by Dan Freed in New York. Follow this writer on Twitter.