MBA wants Fannie, Freddie to go small

Sam Eaton Sep 2, 2009
HTML EMBED:
COPY

MBA wants Fannie, Freddie to go small

Sam Eaton Sep 2, 2009
HTML EMBED:
COPY

TEXT OF STORY

Bill Radke: In a report out today, mortgage bankers are calling on Congress to break up Fannie Mae and Freddie Mac into several smaller, privately held companies. Marketplace’s Sam Eaton has our story.


Sam Eaton: So far, the two government-controlled lending giants have received nearly $100 billion in federal bailout money. That’s kicked off a heated debate over the future of the lenders and how they should operate going forward.

The Mortgage Bankers Association essentially wants to backstop future meltdowns in the industry. The group’s idea to break up Fannie and Freddie into smaller companies is to prevent having so many mortgages and securities fall under just two government backed entities.

Instead, the MBA would want the smaller companies to pay into a federal insurance fund that would guarantee against catastrophic losses. The MBA says unlike the implied protection of the existing system, the new plan would provide explicit federal backing.

The Obama administration is working on its own overhaul plan, but that’s not due until early next year.

I’m Sam Eaton for Marketplace.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.