Tags: Volcker | Fannie Mae | Freddie Mac | housing

Volcker: Discard Fannie, Freddie, But Not Yet

By    |   Tuesday, 25 Oct 2011 08:27 AM

The government-sponsored mortgage agencies Fannie Mae and Freddie Mac should ultimately be discarded, says former Federal Reserve Chairman Paul Volcker.

While Fannie and Freddie can’t be eliminated yet because that would destabilize the housing market, the government needs to ultimately get out of that market, he said in a recent speech and interview with The New York Times.

“We simply should not countenance a residential mortgage market, the largest part of our capital market, dominated by so-called government-sponsored enterprises,” Volcker said in the speech.
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“It is important that planning proceed now on the assumption that government-sponsored enterprises will no longer be a part of the structure of the market,” he said.

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Paul Volcker
(Getty Images photo)
Fannie and Freddie combined guarantee about 50 percent of the country's $10.4 trillion in outstanding home loans.

“This is an opportunity to get rid of institutions that shouldn’t exist,” Volcker tells The Times. “You ought to be either public or private. Don’t mix up private profit-making opportunities with an institution that is going to be protected by the government but not controlled by it.”

In other housing news, the White House is restructuring the Home Affordable Refinance Program (HARP) to make it easier for homeowners to refinance their mortgages at lower interest rates.

But, "This change is unlikely to significantly expand the universe of eligible HARP borrowers, as the borrowers must still be current and qualify for a new loan," Jaret Seiberg of MF Global writes in a research report obtained by CNNMoney.com.

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The government-sponsored mortgage agencies Fannie Mae and Freddie Mac should ultimately be discarded, says former Federal Reserve Chairman Paul Volcker. While Fannie and Freddie can t be eliminated yet because that would destabilize the housing market, the government needs...
Volcker,Fannie Mae,Freddie Mac,housing
1817
2011-27-25
Tuesday, 25 Oct 2011 08:27 AM
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