A hearing scheduled for next week before a Congressional subcommittee that could shed light on the future of the two lending giants was canceled. Treasury Secretary Timothy Geithner said that the Obama administration will delay any proposal to reform Fannie and Freddie until 2011.
“We want to be sure that as we move to reform the GSEs we are focused on retaining strong market stability in our housing sector,” according Michael Barr Treasury’s assistant secretary for financial institutions. “We cannot rebuild securitization markets on the old infrastructure. We look forward to seeing further reform efforts,” he said.
Rep. Barney Frank (D- Mass.), head of the House Financial Services Committee, scheduled the hearing to examine the two companies, which stock is still publicly traded on the New York Stock Exchange. Fannie and Freddie have lost billions of dollars and have been on government life support for more than two years. Frank said the two troubled government lenders should be eliminated and replaced.
The high stakes game over whether the two should be kept in business at tax payer expense, which essentially nationalizes mortgage lending, or they should be left to die will shape the future of the nation’s mortgage market. More than 80% of all U.S. mortgages written are sold to Fannie and Freddie.
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