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Why the Obama administration should revive Fannie and Freddie on its own

The Hill, By Clifford Rossi

Since 2008, we’ve had a zombie mortgage-financing system, a situation that we should no longer tolerate. That year, in the wake of the collapse of the housing market, the government placed Fannie Mae and Freddie Mac, which underwrite the mortgages of many Americans, into conservatorship–a form of nationalization. It was meant to be temporary, but the two government-supported enterprises (GSE’s) remain there, stuck.

Congress and the Obama administration have been unable or unwilling to work together to get Fannie and Freddie back on their feet. Remarkably, the former chairman of the Senate Banking Committee, Tim Johnson (D.-S.D.), urged Mel Watt the head of the Federal Housing Finance Agency, which oversees Fannie and Freddie, to work with Treasury to end conservatorship without Congress.   Watt, however, has long said it’s up to his former colleagues in the Senate to resolve the issue. After Johnson’s comments, Treasury let it be known that fixing Fannie and Freddie was a job for our elected representatives. So it’s back to gridlock.

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