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Geithner says U.S. far behind on housing finance reform
U.S. Treasury Secretary Timothy Geithner testifies before a House Financial Services and General Government Subcommittee hearing on the FY2013 at Capitol Hill in Washington March 28, 2012.
Credit: Reuters/Jose Luis Magana
CHICAGO |
CHICAGO (Reuters) - The United States is far behind on reforming the country's housing finance system, where the government's mortgage buyers Fannie Mae and Freddie Mac provide funding for the bulk of U.S. home loans, Treasury Secretary Timothy Geithner said on Wednesday.
"The biggest source of unfinished business in the financial reform effort is in the housing finance area," Geithner told the Chicago Economic Club.
The Obama administration has proposed to unwind Fannie Mae and Freddie Mac, which buy mortgages and repackage them as securities for investors. The agencies then guarantee the debt.
But the administration and lawmakers are grappling with how to reduce the government's footprint in the housing market without damaging the economic recovery.
Geithner said Fannie Mae and Freddie Mac were "not a source of systemic risk now," since the U.S. government was forced to bail them out at the height of the financial crisis and has used billions of dollars in taxpayer money to keep them solvent.
"We are much further behind in laying out the future path of reform in the housing finance system and what should replace those institutions," Geithner said, adding that he saw early signs of bipartisan consensus for reforming the housing finance market.
(Reporting by Rachelle Younglai, Jason Lange; Editing by Padraic Cassidy)
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Our Congress’s drive to make housing affordable for EVERYONE, was one of the 3 root causes for the 2008 meltdown. Both Fannie and Freddie need to be dismantled and a plan developed, to spread their mortgages, equally, across the existing mortgage lenders in the private sector.
We have twice as many houses as our “middle class” can afford to own. We need a Federal housing development tax on developers prior to construction beginning. The funds to pay the tax should not be allowed to be borrowed.
Rather than propping up the construction industry, we need to find a way to stop the rate at which the middle class is shrinking. More than the housing industry depends on this. And if needed we should think about other ways to tax access to this market, especially taxes that apply to foreign made goods and services as well as domestic ones.
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