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By Al Yoon
WASHINGTON, Feb 1 (Reuters) – The Obama administration must ensure U.S. housing market stability is retained as it reforms the nation’s two largest providers of home mortgage credit, a top Treasury Department official said on Monday.
The administration will further outline principles that will guide the reforms of Fannie Mae and Freddie Mac, two government-sponsored enterprises, said Michael Barr, the Treasury’s assistant secretary for financial institutions.
“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,” Barr told a conference of the American Securitization Forum, a group that promotes interest in the public and private bond markets.
Barr’s comments came after Obama’s fiscal 2011 budget proposal was short on details of how it would rework the GSEs, which have incurred billions of dollars in taxpayer losses under a model that accepts government support but rewards private shareholders.
Speaking to the ASF, Barr also said that private sources of credit must also do more to win investor confidence and reform their markets that created some of the riskiest mortgages and fueled the worst financial crisis since the Great Depression.