Obama Team Promises Housing Finance Reform Proposal by January
Despite Republican objections, congressional Democrats did not include reforms of Fannie Mae and Freddie Mac or of the broader mortgage market in the Dodd-Frank financial regulatory reform bill — now law. The administration has promised comprehensive reform but thus far has not named any objectives, costs or goals.
It’s hard to blame them. Reforming Fannie and Freddie might prove as complicated as reforming Wall Street. The two government-sponsored enterprises are currently backing around nine in ten new mortgages, propping up a weak housing market at a cost of hundreds of billions to taxpayers. Housing experts worry acting too rashly could crater the tentative housing recovery, but also note that the government, at some point, needs to re-regulate mortgage finance, reform Fannie and Freddie and let the private market take over.
Back in April, the Treasury Department released a list of seven questions to this end, asking for experts to submit ideas for reform. Last week, Rep. Barney Frank (D-Mass.) said he will start work on a housing finance bill this fall. And today, the Obama administration announced it will hold a conference on Aug. 17, bringing together community groups, consumer advocates, housing industry figures and economists to contemplate how to fix the multi-trillion dollar market. In its announcement on the Conference on the Future of Housing Finance, the administration said it will have a housing finance reform bill ready by January — the first concrete date it has set, to my knowledge at least.
“The future of our housing finance system is critical not only to our economic recovery, but also to millions of American homeowners in every corner of our country,” Treasury Secretary Tim Geithner said in the press release. “Now is the time to build on the foundation we laid with the historic Wall Street Reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system. The Obama administration is committed to delivering a comprehensive reform proposal that protects taxpayers, institutes tough oversight, restores the long-term health of our housing market, and strengthens our nation’s economic recovery.”