The administration made its announcement on Christmas Eve night. Transparency, baby!
We knew all along that Fannie and Freddie are nothing but arms of the US government. Obama's action is just acknowledging this and making it official. Unfortunately, it will squeeze private industry out of the housing financial system, putting most Americans in the position of having to go to the government to get a home loan. The elimination of the bailout caps means that many people who don't have the means of paying back a home loan will get them, too. Joe Weisenthal has an article at The Business Insider in which he provides analysis from Edwart Pinto on the ramifications of this move.
The above actions would preserve and strengthen the government's involvement and control over the country's housing finance system and make it harder to reintroduce substantial private sector involvement later on. They would also continue distortions in the marketplace leading to who knows what unintended consequences. Finally these steps would do nothing to deleverage the housing finance system, a key step in returning it to any degree of normality.
The first commenter at the article made this disturbing observation:
I live in Beijing and am shocked to realize that the US housing system is now far more Socialist than China's.
This makes me think of the young woman in the YouTube video who said that with Obama as president she won't have to worry about paying her mortgage anymore. At the time I thought she was the idiot, but it seems she was right all along and the American taxpayers are the chumps.
First Obama and the Dems nationalized the student loan system. Now the housing loan system. Next, the health care system. Welcome to the New America, where the government is front and center in virtually every aspect of your life.