Debate over future of Fannie, Freddie
TEXT OF STORY
BILL RADKE:
Treasury Secretary Tim Geithner says Fannie Mae and Freddie Mac can never be the same again. Geithner’s office released a statement this morning ahead of today’s meeting in Washington with the Housing secretary. Bankers will be there, too, along with economists and investors.
Marketplace’s John Dimsdale reports the financial crisis shook the system of government-backed mortgages — and what takes its place is up for debate.
JOHN DIMSDALE: Much of the American dream of home ownership is made possible by taxpayer-backed mortgage financing. But the credit squeeze and falling home values have left taxpayers propping up Fannie Mae and Freddie Mac. A group of Republicans says it’s time to turn housing finance over to the private sector.
Jon Hiler advises House Republicans. He thinks private investors are ready to profit from record low mortgage costs.
JON HILER: With interest rates where they are broadly in the marketplace right now, I think there would be significant private capital to come in and take over the activity that Fannie and Freddie have been involved with.
But advocates for expanding middle-class home ownership say government incentives can work.
John Taylor with the National Community Reinvestment Coalition says Fannie and Freddie safely helped homebuyers for many decades.
JOHN TAYLOR: Let’s instead make sure there’s adequate oversight, adequate capitalization. Don’t allow them to take the kind of risk that the free market took and I think we’ll be fine.
The White House is said to be considering scaling back government support. The administration will send Congress a reform package in January.
In Washington, I’m John Dimsdale for Marketplace.
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