GOP takes smaller steps on Fannie and Freddie
The logos for Freddie Mac and Fannie Mae
Jeremy Hobson: Treasury Secretary Timothy Geithner testifies before the Senate Banking Committee today about a tricky problem -- what to do about the government's role in the mortgage market.
As Marketplace's Nancy Marshall Genzer reports lawmakers are putting the finishing touches on new compromise legislation to deal with Fannie Mae and Freddie Mac.
Nancy Marshall Genzer: A year ago, Republicans were introducing legislation to abolish Fannie Mae and Freddie Mac.
Mark Williams teaches finance at Boston University. He says it was an all-or-nothing approach.
Mark Williams: The term was, put a bullet in Fannie and Freddie and walk away. But I think there's a greater understanding that you can't just do that.
You can't do that because Fannie and Freddie guarantee or own about half of all U.S. mortgages. So now, Republicans are taking a step-by-step approach. Gradually raise the fees Fannie and Freddie charge to guarantee loans. Move them away from the goal of making housing affordable for everyone.
Kenneth Posner is a financial analyst at North American Financial Holdings.
Kenneth Posner: It's almost like the methadone treatment for the heroin addict. To some extent, the U.S. housing market has been hooked on government support.
Some of the Republican measures dovetail with the Obama administration's proposals for Fannie and Freddie. Posner is hopeful Congress will pass legislation this year, before the lessons of the housing crisis are forgotten.
In Washington, I'm Nancy Marshall Genzer for Marketplace.