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MBA wants Fannie, Freddie to go small

Sam Eaton Sep 2, 2009
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MBA wants Fannie, Freddie to go small

Sam Eaton Sep 2, 2009
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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.

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