Fannie Mae and Freddie Mac are rogue elephants. It is time Congress did something to stop their rampage. The government-sponsored mortgage finance companies have exploited the general assumption that they enjoy a de facto government guarantee to trample all over genuine private sector competitors. In the process they have grown so large as to pose a systemic risk to the US financial system and to US public finances. This growth must be permanently halted and ultimately reversed. Richard Shelby, the Republican chairman of the Senate banking committee, deserves full support in his bid to tame them.

As Alan Greenspan, chairman of the Federal Reserve, told the committee this week, Fannie Mae and Freddie Mac have every incentive to keep on growing ad infinitum. Their shareholders enjoy an implicit interest rate subsidy that allows them to outbid genuine private sector competitors for any security. The more assets they add to their balance sheets, the more profit they make. From 1990 to 2003 their combined portfolios grew tenfold to $1,400bn (£746bn), while their share of the mortgage market quadrupled to 23 per cent. Growth paused last year as accounting scandals hit, but will resume unless Congress acts to stop it.