Financial Regulatory Forum

SCENARIOS – Reshaping Fannie Mae and Freddie Mac

WASHINGTON, March 22 (Reuters) – Treasury Secretary Timothy Geithner is expected to lay out the Obama administration’s broad vision for restructuring mortgage finance giants Fannie Mae and Freddie Mac on Tuesday in congressional testimony.

Geithner has said that any specific legislative proposals will not come until 2011 at the earliest. His testimony before the House Financial Services Committee on Tuesday is expected to be the first step in a long journey to make changes to the existing housing finance system.

The government seized Fannie and Freddie at the height of the financial crisis, in what at the time was said to be a temporary measure to ensure credit remained available for homebuyers.

Last fall, the U.S. Government Accountability Office said that move will likely muddy efforts to restructure the two companies, which own or guarantee about half of U.S. residential mortgages.

The GAO said the two government-sponsored enterprises have a mixed record in meeting their mission to foster affordable housing, and that both capital and risk management deficiencies had compromised their safety and soundness.

US Rep Frank sees ending Fannie Mae, Freddie Mac in current form

WASHINGTON, Jan 22 (Reuters) – Mortgage giants Fannie Mae and Freddie Mac are likely to be abolished in their current form, a key lawmaker in the U.S. House of Representatives said on Friday.

“I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in its current form and coming up with a whole new system of housing finance. That is the approach rather than the piecemeal one,” said Representative Barney Frank, chairman of the powerful House Financial Services Committee and a Massachusetts Democrat.

Frank made the comments at hearing on executive compensation.    He later told reporters he will hold hearings on the housing finance market and then move to a restructuring of Fannie Mae and Freddie Mac. He said he would look at Federal home loan banks and the structure of the Federal Housing Administration and Ginnie Mae.

Unlimited credit for Fannie, Freddie seen as backdoor U.S. bailout

By Corbett B. Daly

WASHINGTON, Jan 5 (Reuters) – At a hearing last fall, U.S. Treasury Secretary Timothy Geithner told lawmakers that he and his team were working to put the $700 billion financial bailout fund “out of its misery.” But some in Washington now see a second, backdoor bailout in its place.

On Dec. 24, the Obama administration announced it was extending an unlimited credit line to mortgage finance agencies Fannie Mae and Freddie Mac, which would keep them afloat no matter how high their losses.

Representative Dennis Kucinich, an Ohio Democrat who was an early opponent of Obama in the 2008 presidential race, thinks the move is backdoor way to help banks, and a congressional subcommittee he leads is investigating the Treasury’s decision to cover unlimited losses at the housing finance companies.

US pay czar: Fannie Mae, Freddie Mac unique when it comes to pay

WASHINGTON, Dec 30 (Reuters) – Mortgage finance firms Fannie Mae and Freddie Mac face a unique set of problems that distinguish them from other companies receiving government aid when it comes to setting executive pay, the Obama administration’s pay czar said on Wednesday.

The two government-controlled companies, which have tapped Treasury credit lines to the tune of a combined $111 billion, said last week they would pay their CEOs up to $6 million in cash for this year.

Kenneth Feinberg, the Treasury Department official charged with overseeing executive pay at firms receiving aid from the government’s $700 billion bailout fund, told CNBC the uncertainty over the future of the mortgage finance companies was one factor that made their situation unique.

U.S. Fannie, Freddie regulator Lockhart to leave post – official


WASHINGTON, Aug 5 (Reuters) – James Lockhart, the regulator for Fannie Mae and Freddie Mac, will soon step down after more than three years as overseer for the mortgage finance companies, an administration official said.