The government's plan to dissolve gradually Obama's housing crisis and Fannie Mae and Freddie Mac to reduce the government's role in the mortgage market was praised by House Republicans on Tuesday. The GOP chairman of the House Financial Services Committee called the proposal a good starting point for negotiations on a bipartisan housing reform.
The positive reaction came as Treasury Secretary Timothy Geithner told the committee that the Obama administration wants Congress to pass legislation in the two years that would gradually dismantle Fannie and Freddie. If not, I worry about the financial markets, leaving major unresolved issues, he said.
"Our hope is Congress will work with us to find a consensus for long-term solution," Geithner told lawmakers.
The hearing took place three weeks after the Obama administration released a report calling for a marked reduction of the federal role in housing matters. The nation's housing market has been battered in recent years by low housing prices and a large number of foreclosures, and politicians from both parties want to find a way to private providers - not government - are more load.
"You do not want to run a system in which the taxpayer is on the hook when things go wrong," said Geithner.
However, no consensus - even among members of the same party - more precisely, what to do. And it is not clear whether the most important legislation, as this could be approved during the approach of presidential elections next year when partisan divisions are intensifying.
Fannie and Freddie guarantee or own nearly half of all U.S. mortgages. Along with other federal agencies, which have played a role in nearly 9 of every 10 new mortgages last year, as private providers have remained nervous about making new loans. The two companies nearly collapsed in 2008 as the housing market collapsed, but have been kept alive with $ 150 billion - so far - in taxpayer dollars.
Management believes that the final cost of this rescue plan will be $ 70 billion to 75 billion dollars or less, said Geithner.
In a written statement distributed attended the hearing, committee Chairman Spencer Bachus, R-Ala., Said that Republicans are willing to sit down with administration officials "as soon as possible to create legislation to produce a global funding housing reform plan. "
The representative Scott Garrett, RN.J., another member of the committee, also noted the common ground between Republicans and the administration plan, including the elimination of Fannie and Freddie and the move toward a system of mortgage financing Private.
"I think there is an opportunity to reach a broad-based consensus," said Garrett.
As part of its plan to phase out Fannie and Freddie, the government wants to reduce the size of mortgages they can buy and raise the fees it charges - proposals to help private providers are moving back into the mortgage market .
Generated criticism from lawmakers in New York and Los Angeles, who said the lower limits hurt homeowners in high-priced districts.
"I do not know if you create a double-dip recession in the country, but certainly in many areas," said Rep. Brad Sherman, D-Calif.
While both political parties recognize that changes are needed to protect taxpayers and boost private lending, Republicans tend to want to move with more force while Democrats express more concern about maintaining the role of government in helping families lower incomes.
Rep. Melvin Watt, DN.C., said he had found only "a phrase" in the administration report to help homeowners of low and moderate income. And Rep. David Scott, D-Ga., Said that Fannie and Freddie have helped blacks get mortgages who face discrimination.
"There is a role for government here," said Scott.
To relax roles of Fannie and Freddie in the market, the government also wants to take steps to ensure that you do not need congressional action, such as decreasing the size of the loans of the two companies can buy. Geithner also reiterated the administration plans to constrict the role of the Federal Housing Administration in making loans, which has admitted will drive up housing costs.
"The cost of a mortgage will be higher in the future," said Geithner.
The administration report offered three options to reform Fannie and Freddie. Could limit the government to help poor borrowers and middle class through agencies such as FHA. The second is that the government of new private mortgages, but especially in times of economic crisis. The third would give the broader role to reinsure certain mortgage investments that are already guaranteed by private insurers.
Geithner declined to be assets of the option the government prefers, at one point saying, "You could imagine, in fact, a mixture of the three options to be the best place to land."
Fannie and Freddie buy mortgages from banks and other primary lenders, package and sell them along with a guarantee that investors would be paid in case of default. This system helps to keep interest rates low and provides lenders with fresh capital for additional loans.
