WASHINGTON: Fannie Mae and Freddie Mac should be abolished rather than reformed as part of the Obama administration's planned overhaul of the government's role in housing finance, Representative Barney Frank, chairman of the House Financial Services committee, said on Tuesday, Aug 17.
"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. "They only question is what do you put in their place," Frank said.
The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidise housing, Frank said in the interview.
"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidise housing then we could do it upfront and let the budget be clear about that.
Fannie Mae and Freddie Mac are government-sponsored enterprises ' privately owned companies supported by the government.
Frank said that he does believe the federal government should have a role in building affordable rental housing but thinks money should go toward projects by private developers.
On the question of whether the government should still provide some guarantees in the mortgage market, Frank said: "If we have it (guarantees), it has to be self-financed by the people who are benefiting."
Frank commented after Treasury Secretary Timothy Geithner convened a Washington conference of housing industry leaders to hear ideas about reforms for the US$10.7 trillion (RM33.81 trillion) mortgage market.
The firms' pursuit of growth and profits helped precipitate the financial crisis of 2007-2009, but their vast resources also helped minimise its impact.
Together, Fannie and Freddie and the Federal Housing Administration now back 90% of new US home mortgages.
Fannie and Freddie have received US$150 billion in taxpayer bailout money. They were taken over by the Bush administration in 2008 to save them from collapse.
In the Fox Business interview, Frank also was critical of public policy that promoted homeownership at any cost. He also said the federal government should not be a "backstop" in guaranteeing mortgages.
"There were people in this society who for economic and, frankly, social reasons can't and shouldn't be homeowners," Frank said. "I think we should, particularly, stop this assumption that you put everybody into homeownership."
"Public policy has been too much to try to push people into homeownership." ' Reuters
"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. "They only question is what do you put in their place," Frank said.
The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidise housing, Frank said in the interview.
"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidise housing then we could do it upfront and let the budget be clear about that.
Fannie Mae and Freddie Mac are government-sponsored enterprises ' privately owned companies supported by the government.
Frank said that he does believe the federal government should have a role in building affordable rental housing but thinks money should go toward projects by private developers.
On the question of whether the government should still provide some guarantees in the mortgage market, Frank said: "If we have it (guarantees), it has to be self-financed by the people who are benefiting."
Frank commented after Treasury Secretary Timothy Geithner convened a Washington conference of housing industry leaders to hear ideas about reforms for the US$10.7 trillion (RM33.81 trillion) mortgage market.
The firms' pursuit of growth and profits helped precipitate the financial crisis of 2007-2009, but their vast resources also helped minimise its impact.
Together, Fannie and Freddie and the Federal Housing Administration now back 90% of new US home mortgages.
Fannie and Freddie have received US$150 billion in taxpayer bailout money. They were taken over by the Bush administration in 2008 to save them from collapse.
In the Fox Business interview, Frank also was critical of public policy that promoted homeownership at any cost. He also said the federal government should not be a "backstop" in guaranteeing mortgages.
"There were people in this society who for economic and, frankly, social reasons can't and shouldn't be homeowners," Frank said. "I think we should, particularly, stop this assumption that you put everybody into homeownership."
"Public policy has been too much to try to push people into homeownership." ' Reuters
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