Obama administration to move forward with closing Fannie Mae, Freddie Mac

[alp227]

The Obama administration plans to push forward this spring with efforts to wind down government-backed housing giants Fannie Mae and Freddie Mac and attract more private funding to mortgage markets, Treasury Secretary Timothy F. Geithner said Thursday.

Geithner told reporters that administration officials have begun more intensively exploring legislative options for overhauling the nation’s housing finance system with lawmakers on Capitol Hill, as well as with academics and outside advocacy groups.

Still, he said that concrete changes won’t come soon.

“It’s going to be a complicated process,” Geithner said. “We don’t expect to legislate this year.”

full: http://www.washingtonpost.com/business/economy/obama-administration-to-move-forward-with-closing-fannie-mae-freddie-mac/2012/02/02/gIQAsl0XlQ_story.html

I'm reading the book Reckless Endangerment by New York Times journalist Gretchen Morgenson. It reveals much of the corruption of the FM's and how they intimidated congress.

[DJ13]

1. ..... attract more private funding to mortgage markets

Because it worked so well for student loans?

[primavera]

8. That was my thought, too

Oh goodie, more business for loansharks like BoA and Wells Fargo, yipee.

[99th_Monkey]

2. So Obama has swallowed "The Big Lie", hook line and sinker?

This makes me want to cry. Seriously .. I used to work for non-profit building
affordable lease-to-own housing, and Fannie Mae was one of the most helpful
resources in the entire field.

Here's what's really going on, and why blaming Fannie and Freddie for the crisis
total BS.
http://www.nytimes.com/2011/12/24/opinion/nocera-the-big-lie.html

[banned from Kos]

9. no he has not (like you already know). Gretchen Morgensen became the darling of the Rush/Sean

LIAR crowd after her book hit last year.

She is another Judith Miller.

[99th_Monkey]

15. I'm not saying the FMs were without blame

but trying to hang all the blame on them, while ignoring the Fed, SEC Goldman, et. al. is ludicrous (like you already know).

[IndyJones]

3. This is good news. I'm glad to see they are moving forward to close them both.

[LostinRed]

4. Exactly

There was a story on NPR that Freddie was purposely not refinancing mortgages. Theyve become corrupt organizations. They need to be replaced not privatized.

[humblebum]

6. Then reform them, not eliminate them. They are vital to the general well-being

of the nation.

[Snake Alchemist]

12. That is like trying to reform a child molester. nt

[quakerboy]

13. Closing them and shoving all the business over to BOA and Wells Fargo

would be like firing a teacher that took a bribe from a student so that you can hire a known child molester with a penchant for mass murder.

Not an improvement, unless there is a plan in place to replace them with something other than purely private money dominance.

[Snake Alchemist]

14. You have to start from scratch. They are down a trillion and HEMMORAGING

money. Get rid of the bad assets any way you can and then start an entirely new agency with new policies, and under new management.

[humblebum]

16. So then, would you eliminate the US Post Office, or the US Air Force if

they needed a major overhaul? No you would not. The agencies need to be reformed, not eliminated. Far too damaging to the economy, and too important. Giving it all over to private interests will cement the gap between rich and poor and kill any hope for a middle class.

[Snake Alchemist]

17. Apples and oranges.

Fannie was not designed to service loans. Most Fannie loans are handled by private servicers already. That's why you might get a Fannie loan, but be making your payment to Wells Fargo. All Fannie does at that point is hold the risk.

You could sell off all that risk, and start a brand new agency tomorrow that would be in charge of new loan programs.

It's kind of like going to your favorite bar where two partners own it. You drink there every night, but one partner decides that he just doesn't make a good bar owner so he sells his portion to the other guy. You keep drinking there, and are never aware of any of this. The guy who left is free to enter into new partnerships though.

[humblebum]

18. I think we're discussing the same process. nt

[quakerboy]

20. What are the chances of that happening?

What are the chances we walk away with 60+ in the senate? And if we do not, what are the chances the R's would even consider a discussion of not immediately filibustering any program that does not involve massive corruption and waste?

I think you have it backward. Start a new agency, and phase out the old setup. Ending one program on the bare hope of starting a new one someday, maybe, but handing even more power to the financial industry in the now is foolhardy.

[AverageJoe90]

19. Agreed! nt

[creeksneakers2]

5. They provide a vital function in the mortgage market

They guarantee banks get paid. Without Fannie and Freddie, there would be far fewer mortgages granted. Another bang to the housing market could set off another recession.

[hughee99]

7. Yes, once they close them, they'll be more easily able to hide

how much money they lost.

[banned from Kos]

10. No one is hiding anything - they are down $160 billion combined

disgraceful.

But we still need a public mortgage market based on CONFORMING loans with high FICO scores.

[hughee99]

11. They are down AT LEAST $160 billion with 1 trillion the "worst case" scenario

And frankly, I don't buy that $1T is really the worst case.

http://www.bloomberg.com/news/2010-06-13/fannie-freddie-fix-expands-to-160-billion-with-worst-case-at-1-trillion.html

They'll close Fannie and Freddie and open some new "Frankie" or whatever, but all the Fannie and Freddie paperwork goes to some warehouse to sit next the Ark of the Covenant for the next 50 years.