In his June 13 Letter to the Editor, Thomas Bomar, founding CEO of Freddie Mac, emphasizes that the idea of the original management and board was that Freddie's government-sponsored status was to be temporary and transitional. Contrast that intention with the reality of the current Freddie, 35 years later, which is hanging on to its government franchise for all it's worth. And that GSE franchise is worth a great many billions of dollars, not to mention the ability to issue securities every day with no financial statements!

The answer to the unintended consequences pointed out so clearly by Mr. Bomar is simple: Any GSE, if created at all, should have a limited-life charter. Previous generations of legislators knew this, for example giving the original American GSEs, the First and Second Banks of the United States, each a 20-year charter. This allowed the government to refuse renewal of the charters--in the second case through Andrew Jackson's famous "war" with the bank and its congressional supporters. Less known is the result of Jackson's war: the privatization of the bank. Not a bad precedent.

Think how much stronger a position the GSE reformers in Congress would have today if Freddie's charter, last revised in 1989, were set to expire in 2009--or if Fannie's charter, dating from 1968, were on 20-year increments and set to expire in 2008.

Perpetual government-sponsored charters are simply a mistake. Let's at least relearn that lesson.

Alex J. Pollock is a resident fellow at AEI.