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What to do with Fannie Mae & Freddie Mac?

Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case
Bloomberg
The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

 


Fannie & Freddie: The most expensive bailout
CNN Money
Efforts to use the troubled mortgage finance firms to fix housing market problems are likely to push the taxpayer bill for Fannie & Freddie above $100 billion.


August conference set on what next for Fannie and Freddie
MarketWatch
The Obama administration has scheduled an Aug. 17 conference on the U.S. housing finance system, including mortgage-finance giants Fannie Mae and Freddie Mac, according to a White House release on Tuesday.


Cost of Seizing Fannie and Freddie Surges for Taxpayers
NY Times
So far the tab stands at $145.9 billion.


Geithner Written Testimony Before House Committee on Financial Services on GSEs
Treasury
The Administration will be guided by the view that a stable and well-functioning housing finance market should achieve the following objectives: widely available mortgage credit; housing affordability; consumer protection and financial stability.


Suggestions on What to do with Freddie and Fannie

Fannie Mae and Freddie Mac Mission and Regulation
American Bankers Association
ABA strongly recommends that Congress pass meaningful reform legislation that specifically outlines that Fannie Mae and Freddie Mac must stay in the secondary market, and it must permit the new regulator strictly to prevent them from entering the primary market.


Delisted but Not Gone: What to Do About Fannie and Freddie?
Daily Finance
An alternative has to be found for the securitization market, in which banks and other mortgage lenders bundle loans into bonds and sell them to investors. One potential solution is a financial instrument called a covered bond, which has been used in Europe since the 18th century to finance residential mortgage lending.


What to do about Fannie Mae and Freddie Mac?
Economic analysis by Susan Woodward, UCLA, and Robert Hall, MIT
The GSEs should be preserved, mainly because they are the most effective institutions for providing liquidity to the mortgage market.


ICBA: GSEs Critical to Ensuring Strong Secondary Market
Independent Community Bankers of America
Jack Hopkins, president and CEO of CorTrust Bank, Sioux Falls, S.D., told Congress, on behalf of the ICBA, that the housing government-sponsored enterprises are critical to ensuring a strong secondary mortgage market and helping community banks continue to serve their customers.
(Full testimony: www.icba.org/files/ICBASites/PDFs/test041410.pdf.)


Mortgage Bankers Association
The centerpiece of MBA’s recommendation for federal support for the secondary mortgage market is a new line of mortgage-backed securities. Each security will have two components: a) a security-level, federal government-guarantee “wrap” which will in turn be backed by b) private, loan-level guarantees from privately owned, government-chartered and regulated mortgage credit-guarantor entities. (Pg 5 & 9.)


Cloudy Future for Fannie and Freddie
NY Times
Many financial companies are pushing to shrink or even dismantle the two G.S.E.’s in hopes of expanding their own businesses into the resulting vacuum. Financial executives contend that the government does not belong in the housing market.

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