The controversial regulator of Fannie Mae and Freddie Mac is urging lawmakers to drastically scale back or even eliminate the mortgage market’s reliance on taxpayers, Bloomberg News reported.
Edward DeMarco is making his push to privatize Fannie and Freddie less than a week after a bipartisan group of Senators introduced a bill to keep the Obama administration from selling off shares in the government-backed lending giants without congressional approval.
“I have been observing a developing ‘consensus’ among private-market participants that the conforming conventional mortgage market cannot operate without the American taxpayer providing the ultimate credit guarantee for most of the market,” DeMarco said at a House hearing today. “That clearly is one outcome, but I do not believe it is the only outcome that can give our country a strong housing finance system. I believe that our country, and its financial system, are stronger than that.”
Since 2008, Freddie and Fannie have borrowed some $190 billion in taxpayer aid. Fannie Mae expects to report “significant net income” for the next quarter, which could force it to return as much as $62 billion to the U.S. Treasury.
Unlike DeMarco, many officials contend that replacing the lenders could set back the housing recovery.
Sens. Bob Corker, Mark Warner, David Vitter and Elizabeth Warren are fighting to keep Fannie and Freddie under government control regardless of how much taxpayer aid they return, by banning sales of senior-ranking U.S. Treasury- owned preferred shares without congressional approval. [Bloomberg] —Christopher Cameron