Treasury Sets Options to Get Taxpayers Out of Fannie, Freddie
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The U.S. Treasury is planning to wind down Fannie Mae and Freddie Mac, as Treasury Secretary Timothy Geithner set options for weaning the dependence on the government by the $11 trillion mortgage market.
“This is a plan for fundamental reform -- to wind down the GSEs, strengthen consumer protection and preserve access to affordable housing for people who need it,” Geithner said, adding that the changes would be made “responsibly and carefully” to avoid disruptions to the fragile economic recovery.
Geithner set three proposals that would all end in taxpayer support for Fannie and Freddie, which have drawn a combined $150 billion from the Treasury since September 2008.
Real estate brokers and housing developers have told lawmakers that the an overhaul of the mortgage market my be more than the industry dominated by Fannie and Freddie can handle.
One proposal, the most dramatic would see a privatized system of housing finance, with the government involved to aid the home purchases of the low-income and veteran people.
Another option would have the dissolution of Fannie and Freddie, while having the government in normal time aiding the low-income families and veterans, and ramping up aid during times of crisis.
The third option has the government playing its biggest role, imposing further regulations and give lawmakers the role of support during catastrophic times to aid private capital.
The options will surely take months or years to go through the government before a final resolution is put in place.
“This is a plan for fundamental reform -- to wind down the GSEs, strengthen consumer protection and preserve access to affordable housing for people who need it,” Geithner said, adding that the changes would be made “responsibly and carefully” to avoid disruptions to the fragile economic recovery.
Geithner set three proposals that would all end in taxpayer support for Fannie and Freddie, which have drawn a combined $150 billion from the Treasury since September 2008.
Real estate brokers and housing developers have told lawmakers that the an overhaul of the mortgage market my be more than the industry dominated by Fannie and Freddie can handle.
One proposal, the most dramatic would see a privatized system of housing finance, with the government involved to aid the home purchases of the low-income and veteran people.
Another option would have the dissolution of Fannie and Freddie, while having the government in normal time aiding the low-income families and veterans, and ramping up aid during times of crisis.
The third option has the government playing its biggest role, imposing further regulations and give lawmakers the role of support during catastrophic times to aid private capital.
The options will surely take months or years to go through the government before a final resolution is put in place.
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