Good Luck Privatizing the American Dream

Donald Trump's nominee for Treasury secretary, Steven Mnuchin, has said that he wants to put the U.S. mortgage market back into private hands -- and do it "reasonably fast." He'll have his work cut out for him.

Mortgage behemoths Fannie Mae and Freddie Mac represent a big piece of unfinished business left over from the financial crisis. The companies, which purchase and guarantee home loans, used to have a business model similar to the largest U.S. banks: They generated abundant profits for shareholders thanks in large part to low borrowing costs, which in turn depended on the assumption that the government would bail them out if they got into trouble. That bailout became necessary in 2008. Unlike the banks, though, they have been wards of the state ever since.