Republicans: Phase Out Fannie, Freddie Over 4 years

Rep. Spencer Bachus (Associated Press)House Republicans are calling for the veritable end of a decades-old system of financing the majority of U.S. mortgages through two government-sponsored entities known as Fannie Mae and Freddie Mac, according to their proposed phase-out over the next four years.
The group of Republicans led by Rep. Spencer Bachus, of Alabama, wants the operations of both Fannie and Freddie to wind down over a four-year process that would result in private capital as the primary source of mortgage financing.
The proposal includes reducing the current mortgage portfolio holdings of Fannie and Freddie by 25 percent a year, and appointing an inspector general to oversee operations until the goal is met.
The Republican plan also calls for moving the operations of Fannie Mae and Freddie Mac onto the federal budget to “ensure fully transparent and honest accounting of all government spending and liabilities.” They are also proposing a regulatory framework for a U.S.-covered bond market.
“It is time to deal with bailed out companies, which were at the center of the mortgage market meltdown that caused the financial crisis, and have cost taxpayers hundreds of billions of dollars.” Bachus said. “House and Senate Democrats have chosen to essentially ignore the problem as part of financial regulatory reform, and the Administration’s strategy is to punt the problem into the future.”
U.S. Treasury Secretary Timothy Geithner told a Congressional committee last month that a finalized overhaul of Fannie and Freddie won’t be proposed until next year. The House Financial Services Committee, chaired by Rep. Barney Frank, D-Massachusetts, is scheduled to hold a hearing on March 23 on the future of the two companies.  Geithner will likely testify.
Both Democrats and Republicans have denounced the roles that Fannie and Freddie played during the housing bubble build-out, acquiring toxic private label and other securities laden with subprime mortgages.
The government seized the two corporations in the fall of 2008 in an arrangement that gives U.S. taxpayers an 80 percent stake in the two giants. At the time, they owned or guaranteed about half of the $12 trillion mortgage market.
Fannie and Freddie have already sought nearly $127 billion in bailouts, and since a controversial Christmas Eve announcement by Treasury, now hold open-ended credit lines to cover quarterly shortfalls for three years.

2 thoughts on “Republicans: Phase Out Fannie, Freddie Over 4 years

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  • April 23, 2010 at 9:20 am

    Do not get rid of fannie and freddi. Private means, scoundrels will take over the system such as they did before the advent of fred and fanni. Apparently some in congress think amaericans have a short memory.. I would suggest combining them in one. Fannifred. In oklahoma, they have a tri county program. I would also suggest to help homeowners, the govt should offer a grant process, thats gree of paying monthly charges to companies which take advantage of first time home buyers. Combine all city, county, state and federal programs into one. Pooling the money available, with self help equity, would greatly reduce, the burden on an overly taxed america. And speed up the process of rejuvenating the housing market.

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