I wasn't going to write on this particular piece of idiocy I saw this morning until Bloomberg tweeted the story.....

What does a U.S. immigration program have to do with the housing market? Nothing. Yet lawmakers are once again attempting to tap mortgage-finance giants Fannie Mae and Freddie Mac to fund unrelated legislation, this time to cover the cost of increasing the number of green cards for foreign graduates with advanced degrees. Fannie and Freddie, it seems, have become Washington’s favorite piggy bank.

Have become?

What was the founding purpose of Fannie, back in the day of HOLC?  Why that's simple -- to provide lower-than-market rates to borrowers.

How is that not a "piggy bank" from Washington DC?

Of course it is.  And it has continued since.

The artificial and intentional distortion of lending markets leads to risk being misrepresented in the market and thus asset prices go up further than they should.  This is intentional.

It is also unsustainable, because losses are not hypothetical, they're real.  When the dissembling that is represented by price distortion becomes evident then the loss must be taken by someone.

When that "someone" has an implicit (or explicit) government backstop then the piggy-bank nature of the entity comes to the forefront and is unmasked.

This, of course, Bloomberg's "View" has no problem with at all.  It is only when the funneling of money goes somewhere they dislike that they squawk.

There’s no question guarantee fees should slowly increase. Fannie Mae and Freddie Mac don’t make mortgage loans but guarantee them by charging lenders a fee to cover projected losses from defaults. For too long, the companies underpriced risk and charged too little for the mortgages they were agreeing to back, which is one reason they were bailed out and placed under government control.

Absent a broader effort to overhaul housing finance, raising fees with no consideration to their effect on the housing market poses new risks. The guarantee fees are passed on to borrowers, typically through higher interest rates. Raising fees too quickly could hamper the housing recovery by making it more expensive to borrow. Higher fees also thwart the Federal Reserve’s attempts to stimulate the economy by keeping interest rates low.

So there it is; the admission, albeit masked, that suppressing fees generates a false "recovery"!

But it gets better:

Right now, Fannie Mae and Freddie Mac own or guarantee almost 84 percent of mortgage debt. Private capital is almost nonexistent, largely because of the heavily subsidized presence of Fannie and Freddie.

And there's the admission again -- Fannie and Freddie are nearly all of the market because private capital judges the risk to exceed the return and thus stays out.

In other words the alleged "demand" represented in the alleged "market" is false and represents a "piggy bank" that is being given to the banksters and housing industry.

Bloomberg's "View" holds that it is perfectly ok to steal in this fashion -- so long as they like where the proceeds of the theft go.

An honest perspective would be that theft is wrong irrespective of whether you like the result.

But integrity, it appears, is a bridge too far for Bloomberg.