Geithner Admonishes Freddie And Fannie To Change
Treasury Secretary Timothy Geithner called for changes to be made in the US mortgage market at a recent press conference. He didn’t announce any regulatory deadlines or strategies, though. However, it is anticipated that he can be telling Freddie Mac and Fannie Mae to get their houses in order within the next year. Geithner also admonished the United States cannot afford to pick the tab up for them again.
Geithner hasn’t announced a strategy
Freddie Mac and Fannie Mae have not been told to do anything yet. However, Geithner did make a few things perfectly clear. First, Fannie and Freddie will not be resuming business within the manner they were conducting it before the market meltdown. The two mortgage houses would also not be put in position to try and dominate the mortgage market. As outlined by Reuters, he also pointed out that the current housing market was not going to last in the long term.
There isn’t a set in stone game plan
Industry authorities and economists haven’t come to any universal conclusions on how best to reform the industry. Geithner did advocate retaining mortgage underwriting through Fannie and Freddie, as government backing for mortgages is a practice that all industrial nations participate it. Some, such as Bill Gross, the co-founder of the Pacific Investment Management Co., argue full nationalization is necessary. According to Businessweek, the investment guru contended the private market can’t make a comeback at this point.
Change has to be made in some form
Despite the wide range of opinions that exist about what to do about Fannie Mae and Freddie Mac, all agree something has to change. The government has already, as outlined by NPR, spent $ 150 billion on the mortgage houses. Thus far for this year, 89 percent of all mortgages in the US were underwritten by Fannie Mae, Freddie Mac, and Ginnie Mae. As opposed to Fannie and Freddie, Ginnie Mae securitizes only some mortgages, doesn’t lend to any person, and is completely part of the US government.
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Reuters
reuters.com/article/idUSTRE67G3E820100817
Business Week
businessweek.com/news/2010-08-17/gross-urges-full-nationalization-of-housing-finance.html
NPR
npr.org/blogs/money/2010/08/17/129250765/socialized-housing-for-everyone
