Fannie and Freddie deserve an overhaul
Patient Zero (or, at least, #1) if the United States’s current recession is coming under fire from the Obama administration.
The Obama administration called for “fundamental change” at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage finance giants and U.S. housing policy.
This comes two years after the government seized Fannie Mae and Freddie Mac to save them from collapse.
“We will not support returning Fannie and Freddie to the role they played before conservatorship, where they took market share from private competitors while enjoying the perception of government support,” Geithner said.
“We will not support a return to the system where private gains are subsidized by taxpayer losses.”
The conference, with some of the mortgage sector’s top lenders and investors, is billed as a “listening session” for the administration to gather ideas as it develops an overhaul plan by January. No major changes are expected before 2011.
With Congress focused on elections in November, federal spending coffers depleted and nerves on edge about changes that could trigger another housing crash, lawmakers looked likely to move slowly on overhauling housing finance, analysts said.
Enthusiasm in some quarters for removing government from housing finance was certain to collide with the political reality that housing subsides, such as the mortgage interest deduction, are deeply entrenched facets of U.S. economic life.
The problems and costs of Fannie Mae and Freddie Mac were not addressed in the sweeping Wall Street reform legislation approved by the U.S. Congress in July — a yawning gap in the Democratic bill that Republicans have sharply criticized.
Posted on August 17, 2010, in Finance Reform 2010, Newspaper & Journal Articles, Politics & The Economy and tagged congress, Democrats, Fannie mae, fannie mae overhaul, fannie overhaul, finance overhaul, freddie mac, freddie mac overhaul, freddie overhaul, obama, obama administration, overhaul, Republicans, white house. Bookmark the permalink. Leave a comment.