Barr: Privatize Freddie, Fannie

WASHINGTON, July 15 (UPI) -- Libertarian presidential candidate Bob Barr called Tuesday for the privatization of mortgage giants Fannie Mae and Freddie Mac.

The lenders, which guarantee home mortgages, are in financial crisis, federal officials have said.

Barr, a former Republican congressman from Georgia, said in a statement the situation "demonstrates yet again how government intervention in private markets almost always comes to grief."

He said while the companies operate as private companies they were created by Congress and "enjoy significant advantages" over truly private companies, including cheaper borrowing, lower capital requirements, and a federal guarantee.

"Immediate privatization is difficult because the markets doubt the organizations can survive without government support," Barr said. "Insolvency and a forced asset sale would roil both the housing and financial markets."

He said the federal government is to blame for companies' woes.

"Congress created programs to artificially inflate the housing market, established Fannie Mae and Freddie Mac to be exempt from normal scrutiny, oversight, and competition, and expanded their activities in response to the sub-prime lending meltdown," he said. "Government must get out of the mortgage business, but must do so in a way that least harms taxpayers and the economy."