U.S. Treasury Secretary Timothy F. Geithner said today that the Obama administration will develop a "comprehensive reform proposal" for Fannie Mae and Freddie Mac for Congress later this year, according to an article by Rebecca Christie today at Bloomberg.com.
Mr. Geithner told the House Financial Services Committee that he is calling for an end to the "ambiguity" over the government's involvement in Fannie Mae and Freddie Mac and endorsed a need to redesign federal guarantees in housing finance, adding that he has "not seen an ideal model yet to replace this current system," the article said.
He said that the Treasury Department and the Department of Housing and Urban Development will issue a request for comment by April 15 on how to overhaul the U. s. housing finance system and its regulatory structure, the article continued.
"The mortgage companies have been in government conservatorship since 2008," the article said, "with Treasury funding to allow them to keep supporting the housing market. The cost of government backing is likely to lead to 'substantial losses on the inherited commitments of these two institutions,' Geithner said. 'It's very hard to judge what the scale of losses are.'"
The article noted that Barney Frank, the committee's chairman and Democrat from Massachusetts, said the mortgage-finance companies should be phased out, but
"Geithner told lawmakers that it would be a mistake to either abolish or fully nationalize Fannie and Freddie."
"He said the government instead needs a new housing finance system in which 'we preserve the good but end what was too risky.' He said there's a 'good' case to be made for some kind of government guarantee or support accompanied by more closely monitored and curtailed risk-taking," according to the article.
"Geithner," the article said, "said the government had 'few viable alternatives' to its extensive support of Fannie and Freddie because the two companies are so central to the housing market. Private capital isn't available in sufficient strength to fund the mortgage market and make credit widely available, he said. Before the government stepped in, the two companies guaranteed more than $5 trillion in residential mortgage-based securities, or almost half of the U.S. residential mortgage market, Geithner said. They also had more than $1.7 trillion in outstanding debt, held equally by foreign and U.S.-based investors, he said."
Mr. Geithner told the House Financial Services Committee that he is calling for an end to the "ambiguity" over the government's involvement in Fannie Mae and Freddie Mac and endorsed a need to redesign federal guarantees in housing finance, adding that he has "not seen an ideal model yet to replace this current system," the article said.
He said that the Treasury Department and the Department of Housing and Urban Development will issue a request for comment by April 15 on how to overhaul the U. s. housing finance system and its regulatory structure, the article continued.
"The mortgage companies have been in government conservatorship since 2008," the article said, "with Treasury funding to allow them to keep supporting the housing market. The cost of government backing is likely to lead to 'substantial losses on the inherited commitments of these two institutions,' Geithner said. 'It's very hard to judge what the scale of losses are.'"
The article noted that Barney Frank, the committee's chairman and Democrat from Massachusetts, said the mortgage-finance companies should be phased out, but
"Geithner told lawmakers that it would be a mistake to either abolish or fully nationalize Fannie and Freddie."
"He said the government instead needs a new housing finance system in which 'we preserve the good but end what was too risky.' He said there's a 'good' case to be made for some kind of government guarantee or support accompanied by more closely monitored and curtailed risk-taking," according to the article.
"Geithner," the article said, "said the government had 'few viable alternatives' to its extensive support of Fannie and Freddie because the two companies are so central to the housing market. Private capital isn't available in sufficient strength to fund the mortgage market and make credit widely available, he said. Before the government stepped in, the two companies guaranteed more than $5 trillion in residential mortgage-based securities, or almost half of the U.S. residential mortgage market, Geithner said. They also had more than $1.7 trillion in outstanding debt, held equally by foreign and U.S.-based investors, he said."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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