Everyone agrees there must be housing finance reform

HousingWire, By Trey Garrison

DeMarco discussed the four biggest problems with the ongoing conservatorship under which Fannie Mae andFreddie Mac have operated since 2008.

“Everyday they are operating with uncertainty – doing a billion dollars worth of new business every month with a 30 year tail,” he said. “Every day they make new financial guarantees. And someone has to be manage that tail. The conservatorship cannot simply stand still – eventually you will have staff and management will drift away. Doing nothing including trying to stand still exacerbates the risk.”

Further, DeMarco said, the GSEs are operating with a small amount of capital for what they are doing, and that the more the powers that be wait, the more private capital is going to drift into other areas.

“The conservatorships are a huge barrier to private capital,” he said.

Read full article: Everyone agrees there must be housing finance reform