The Obama Administration delivered a report to Congress today that aims to reform America’s housing finance market. This morning, Treasury Secretary Timothy Geithner unveiled the plan to wind down Fannie Mae and Freddie Mac and shrink the government's current footprint in housing finance on a responsible timeline at a forum hosted by the Brookings Institution today.
The report consists of three different options, one of which would mirror a suggestion by many Republicans in Congress to close the two companies and replace with private businesses. The other two choices would still keep some government involvement: either as a last solution in the case of another financial crisis or institute marginal changes but keeps the same system that’s currently in place.
The plan also lays out reforms to continue fixing the flaws in the mortgage market through stronger consumer protection, increased transparency for investors, improved underwriting standards, and other critical measures. Additionally, it hopes to provide targeted and transparent support to credit worthy potential homeowners, as well as making rental options available.
After Secretary Geithner announced the full report it will soon be submitted to Congress, fulfilling the obligation from last year’s financial regulatory package that required the administration to submit a report on how the government could detach itself from the two mortgage financiers without reversing the economic growth gained since the 2008 takeover.
The Brookings forum will include other mortgage industry experts and a luncheon keynote address by former Federal Bank Chairman Alan Greenspan, who will likely share his reactions and predict the economic impact of the news.