The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would relieve the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, reported the Washington Post. The bad debts the firms own would be placed in so-called bad banks — that would take responsibility for collecting as much of the outstanding balance as possible. The government has since pledged more than $1.5 trillion, including $85 billion in direct aid, to keep the mortgage market working through Fannie Mae and Freddie Mac. The proposal, which is preliminary and one of several under discussion, is scheduled to be taken up by the White House’s National Economic Council today. The report said National Economic Council Director Lawrence H. Summers has long wanted to overhaul the companies. The government’s efforts so far “have taken the risk out of those two firms,” Treasury Secretary Timothy F. Geithner said in a recent interview.
Team Obama Moves to Overhaul Fannie and Freddie
Summers looks to overhaul the mortgage companies
August 6, 2009