The Trump administration is floating a plan to sell shares of government-controlled mortgage behemoths Fannie Mae and Freddie Mac. But it would retain the government’s implicit guarantee that protects their investors against losses. Bad idea.

As the 2008 financial crisis so painfully reminded Americans, permitting Fannie and Freddie to generate private profits, but requiring taxpayers to foot the bill for mortgage defaults, is a recipe for expensive financial disaster.

The implicit guarantee encourages more high-risk lending. It’s a “heads I win, tails the taxpayers lose” contraption. This inflates demand for mortgages with high default rates and makes another housing market crash and financial crisis more likely.

The American Enterprise Institute estimates these mortgage subsidies raise interest rates on federal debt by 10-15 basis points estimates, and annually adds about $29 to $43 billion to federal spending.

Privatizing Fannie and Freddie is the right policy – but only if the government eliminates their expensive and dangerous implicit guarantee.