This is the Cato Daily Podcast for Wednesday, April 3rd, 2013.

I'm Caleb Brown.

Fannie Mae turned a profit as the housing market rebounds, but how real are those profits?

And the president wants banks to give easy credit to

weak borrowers raising the question didn't that exact policy fuel the housing meltdown?

Mark Calabria, director of financial Regulation Studies at the Cato Institute's comments.

What does it matter that Fannie Mae has made money this quarter?

Well, let's keep in mind that despite the fact that this quarter they have made

17 billion it really doesn't matter in terms of we haven't gotten all the money back

I mean we've put about a hundred and ninety billion into Fianny and Freddie.

We've gotten some of that back, but what it really matters for is it matters for the terms of

the political debate and it matters for a couple of reasons. I mean one there will be the continuing attraction because the current system

essentially sweeps all the profits to Treasury so it gives politicians money to spend and of course I have yet to meet a politician

who doesn't like to spend a stream of money. So it becomes very difficult in the future to do

political, to do reform of Fannie and Freddie if Washington basically gets to spend the money directly.

So that's one of the differences.

The other indifference is it changes somewhat the rhetoric?

You know, certainly Fannie and Freddie are very

central contributors to the financial crisis.

And, you know, the size of the whole

really makes it very difficult for those who would like

to you know be those apologies for Fannie and Freddie to say well you know their victims

...