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Treasury Secretary Tim Geithner speaks during a Conference on the Future of Housing Finance at the Treasury Department in Washington, D.C. - 


Bill Radke: The government's hearing on what to do about Fannie and Freddie wrapped up yesterday. Today, the general consensus is: Goodbye Fannie and Freddie. Hello... What exactly?

Marketplace's Gregory Warner reports.

GREGORY WARNER: Barney Frank says Fannie and Freddie have to go. The chairman of the House Financial Services Panel -- former champion of the government-backed system -- now says the federal government should not be a "backstop" in the mortgage crisis. The only question, he says, is what to put in their place.

Treasury Secretary Timothy Geithner sounded a similarly ambiguous note at yesterday's hearing. Signaling the end of Frannie Mae and Freddie Mac, and the beginning of... something.

Timothy Geithner: These were avoidable failures, and it is our responsibility to make sure we create a system that is not vulnerable to these same failures happening again.

At stake is the future of the 30-year fixed-rate mortgage that Americans have come to depend on. Without Fannie and Freddie as the big gorillas in the room, the government will still need a way to assure banks they'll get back for millions of mortgages. Otherwise private banks won't make those loans.

A world without Fannie might move the government from being on the first string to being on the bench in case a recession or banking crisis happened. Those loans would need to be covered by taxpayers only if things went bad in the housing market.

In Philadelphia, I'm Gregory Warner for Marketplace.

Follow Gregory Warner at @radiogrego