What have you always wondered about the economy? Tell Us

U.S. Treasury looks to phase-out Fannie and Freddie

David Gura Feb 11, 2011
HTML EMBED:
COPY

U.S. Treasury looks to phase-out Fannie and Freddie

David Gura Feb 11, 2011
HTML EMBED:
COPY

TEXT OF STORY

JEREMY HOBSON: Mortgage giants Fannie Mae and Freddie Mac have cost taxpayers about $150 billion since they were taken over by the government in 2008. And today, at long last the Treasury Department will unveil its plan to wind down the two companies.

From Washington, Marketplace’s David Gura reports on what that means for the future of home buying.


DAVID GURA: Even though home buyers have never written them a mortgage check during the financial crisis. It goes without saying that Fannie and Freddie are important to millions of Americans. And to the U.S. economy. The two finance companies guaranteed most of the home loans underwritten today. But after the big government bailout, many analysts think Washington should play a smaller part in the mortgage market.

Susan Wachter is a real estate professor at the Wharton School.

SUSAN WACHTER: We need to get back to a system where we’re not only relying on the federal government.

That would mean private banks are doing most of the lending. David Malpass agrees with that idea. He’s the president of the economic research firm Encima Global. But he’s not convinced it’ll happen any time soon.

DAVID MALPASS: Washington’s been defending Fannie and Freddie for over thirty years, so it’s unlikely that they’ll actually dig into the problems and propose constructive changes.

Even though we haven’t seen the plans yet, reports are the White House has three options.. One calls for the wholesale elimination of Fannie and Freddie. The other two suggest the government should be involved in the mortgage market but in a much smaller capacity.

In Washington, I’m David Gura, for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.