Ex-FDIC Chair: Reform Push for Fannie and Freddie 'Falling Apart'

Friday, 16 May 2014 09:06 PM

By Sean Piccoli

  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
Financial consultant and former FDIC Chair William Isaac isn't dismissing entirely the prospects for a bipartisan bill that would close down the federal government's troubled home-loan behemoths, Fannie Mae and Freddie Mac.

"The consensus for reform seems to be falling apart, though," Isaac said Friday on Newsmax TV.

The Senate Banking Committee approved the legislation on Thursday by a 13-9 vote, sending it to the full Senate for debate. Politico reported there is "little chance" the bill will get through Congress in this election year.

But Isaac told "America's Forum" host J.D. Hayworth that he's "not sure" how Congress will proceed or if the Obama administration will agree to eliminate two agencies that figured into the housing collapse and financial crisis.

"I do know that the Obama administration said shortly after the crisis — and that has been their position all along— that we really need to do some major reforms with Fannie and Freddie," Isaac said. "They said that was a priority."

Whether "major reforms" translates to "closure" in the mind of the administration isn't clear. For Isaac it's the most sensible step.

"We're the only country in the world that has these enterprises and everybody else seems to be doing just fine without them," he said. "There's no question in my mind that Fannie and Freddie were huge contributing factors in the financial collapse we had in 2008-2009, and we desperately need to reform them."

Story continues below video.

Isaac said the best approach is to draw down Fannie and Freddie in stages— which the Senate bill does— and return that loan activity, or most of it, to the private sector— which the Senate bill does not.

"We can't do everything at once but it seems to me that a relatively simple way to wind them down is to keep on lowering the size of loans that they could deal on," he said.

"Right now they're up somewhere around $750,000. I would lower that by perhaps $100,000 a year until they really have no authority to be dealing with guaranteeing these loans anymore.

"The private sector can take care of this quite well with the possible exception of subsidized housing," he said. "Maybe for veterans, maybe for other folks, we really want to have a subsidized housing program. If that's the case, then the Congress ought to do that online, authorize the subsidies, have a budget for it, and hold people accountable."

The Senate bill has its critics: the Competitive Enterprise Institute called it a "monstrosity" that simply steers the two agencies' money and authority into another government agency.

Isaac's concern is that some Democrats who plainly want to keep Fannie and Freddie intact also want to ease lending: "They were talking about going back to the bad old days— lower down payments, lower interest rates— making it more possible for more Americans to own housing. And that hasn't worked in the past. It led to this massive crisis we had.

"And here they are, they want to do it again."

Related Stories:

© 2014 Newsmax. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Holder Urges Police Restraint Ahead of Ferguson Decision

Friday, 21 Nov 2014 12:26 PM

Attorney General Eric Holder on Friday urged police to show restraint in dealing with any protests that may follow a gra . . .

Cosby Performances Canceled in Las Vegas, Tucson

Friday, 21 Nov 2014 11:57 AM

Bill Cosby's appearances at Casinos in Las Vegas and Tucson, Arizona have been canceled amid widening allegations of sex . . .

ICE Prepares to Deal With Deluge of New Illegals in 2015

Friday, 21 Nov 2014 11:19 AM

The Obama administration is bracing for another surge of illegal immigrants into the United States next spring. . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved