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The bank bailout has been unwound and General Motors is back on its feet, but one piece of business from the financial crisis remains unfinished.

Mortgage giants Fannie Mae and Freddie Mac, two of the crisis’ highest-profile casualties, remain under government control even though the housing market has healed and both companies are profitable.

On Thursday, one day short of the 11th anniversary of the firms’ government conservatorship, the Trump administration announced a plan to re-privatize Fannie and Freddie and reduce the government’s role in housing finance.

Some steps in the plan, such as providing an explicit guarantee of the companies’ securities, would require an act of Congress but others can be done by executive action. Treasury Secretary Steven Mnuchin said Monday that he expects to take a key step soon by letting the firms keep some of their profits, which have been swept into the Treasury since 2013.

Fannie and Freddie don’t make loans themselves, but they purchase and package nearly half of all U.S. mortgages. Critics, including Democratic senators, have said the administration’s proposals would increase borrowing costs for homeowners.

“Apart from trying to find a way for some investors to make more money, it’s hard to see what the benefits of this are,” said Dean Baker, a senior economist at the Center for Economic and Policy Research.

The administration’s plan would reward hedge funds who have bought the companies’ common and preferred stock, all of which was nearly worthless back in 2008. Shares of both companies surged Monday after an appeals court panel ruled that the current profit sweep is illegal.

Baker worries that the plan to end government control of Fannie and Freddie is more about politics than sound policy. “These aren’t just hedge funds, they are hedge funds that are very close to people in the Trump administration,” he said.

Edward Pinto, co-director of the American Enterprise Institute’s housing center, hopes the profit sweep will be replaced by a system of fees that compensate taxpayers for the risks they’re taking. “I’ve never been a big fan of the investors having rights to anything,” he said.

The hedge funds sometimes portray themselves as defenders of free enterprise against a rapacious government, but that argument holds little water. Their shares would have no value if the government hadn’t rescued the companies in 2008, and neither company ever paid for Uncle Sam’s implicit credit guarantee. By one estimate, based on what banks pay for deposit insurance, they should be paying $7 billion a year.

Clearly, taxpayers have done much more than shareholders to ensure these firms’ success.

The Trump administration plan would shrink Fannie and Freddie by getting them out of the business of guaranteeing investor loans, cash-out refinancings and certain other mortgages. In many ways, though, it would restore the pre-crisis situation, with private investors enjoying profits and taxpayers bearing the ultimate risk.

Baker prefers the current situation, with the companies under explicit federal control and their profits going to reduce the budget deficit, but he says he understands the free-market argument for getting the government out of the mortgage business.

“This is the worst of both worlds,” he says of the administration’s plan. “I don’t see any way around the moral hazard issue.”

We should have learned in 2008 the consequences of letting firms take excessive risks with other people’s money. Keeping Fannie and Freddie as wards of the state may feel like unfinished business, but re-establishing a flawed system would be a much worse outcome.

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