Administration Lays Out Plan for Winding Down Fannie and Freddie Mac

02/11/2011

By: Carrie Bay

The Treasury Department has just released the Obama administration’s plan for reforming the nation’s housing finance system and winding down Fannie Mae and Freddie Mac.

Officials say the reform measures will shrink the government’s footprint in the mortgage market, fix “fundamental flaws” in the system, increase transparency for investors, and improve underwriting and mortgage servicing standards.

On a conference call with the media, Treasury Secretary Timothy Geithner stressed that “realistically, this is going to take five to seven years” for full reform to be implemented.

HUD Secretary Shaun Donovan added, however, that there are short term steps that don’t require legislation, which can and need to be taken immediately to return private capital to the market.

“We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” Geithner said.

The report has been delivered to Congress. Donovan says the options outlined in the proposal should “deepen debate and dialogue” among lawmakers as they decide the best route to take to move forward. A copy of the full 32-page report can be accessed here.

(developing story)