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Treasury clears air on housing finance reform
WASHINGTON (8/18/11)—U.S. Treasury Deputy Secretary Neal Wolin this week said that the Obama Administration is still considering a range of options for mortgage market reform, adding that the administration “believes that the private sector – subject to strong oversight and consumer protection – should be the dominant provider of mortgage credit.” Wolin in a treasury.gov blog post responded to a recent Washington Post story that claimed the Obama administration is working on a proposal that would maintain a large government role in the mortgage market by subsidizing federal loans for most home buyers. The administration’s approach, the Post reported, could possibly preserve Fannie Mae and Freddie Mac, “although under different names and with significant new constraints.” The deputy secretary reminded both the paper and citizens that the Obama administration has proposed a trio of potential outcomes for Fannie Mae and Freddie Mac, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Wolin said that the administration is still considering all three of these options. “In each of the three options we outlined in our report to Congress, the government's footprint in the housing finance market will shrink substantially,” Wolin said, adding that “any government support for housing finance will be targeted and limited. “This will help ensure that taxpayers are protected and the private sector bears the burden for losses,” he said. For the blog post and the Washington Post story, use the resource links.
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