| U.S. to reduce gov\'t role in housing finance market: Geithner |
| Date: 2011/2/15 Click: 2029 |
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The U.S. government would reduce its footprint in the nation's housing finance market, including plans to wind down Fannie Mae and Freddie Mac, U.S. Treasury Secretary Timothy Geithner said on Friday.
"We are going to start the process of reform now, but this is a complicated issue," he said when addressing a seminar at Washington-based Brookings Institution.
The Obama administration on Friday delivered a "White Paper" report to Congress on reforming the U.S. housing finance market, unveiling plans on fixing fundamental flaws in the nation's mortgage market and increasing transparency for investors among others.
"We are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market," he added.
The two housing finance giants played a major role in the run- up to the severe financial crisis. The U.S. government stepped in to take over Fannie and Freddie in September 2008, which cost U.S. taxpayers multi-billion dollars and has drawn criticism from various sectors.
The administration's long-awaited reform plan presented three different options in an effort to shrink the government's presence in the housing finance system and give the private capital the dominant role on the home mortgage market in the long-run.
The administration recommends ending unfair capital advantages previously enjoyed by the two government sponsored enterprises, by requiring them to price their guarantees as though they were held to the same capital standards as private banks or financial institutions.
The report also suggested gradually increasing down payments from borrowers, reducing Fannie and Freddie's investment portfolio at an annual rate of no less than 10 percent, and helping consumers avoid unfair mortgage practices.
U.S. Housing and Urban Development Secretary Shaun Donovan held that Friday's report provided a strong plan to fix fundamental flaws in the U.S. mortgage market, but prodded that necessary steps should continue to be taken to ensure that Americans "have access to quality housing they can afford." |
