Sept. 6 (UPI) — The U.S. Treasury released a plan to reform the housing sector Thursday, including ending government conservatorship of Fannie Mae and Freddie Mac.
The plan includes more than 50 proposals, stating that privatizing the two major companies — which back more than half of the country’s mortgages — is the “last unfinished business of the financial crisis” in 2008.
“It is, after 11 years, time to bring the conservatorships to an end,” the plan states, adding that doing so is a “critical step” to ending government influence over the housing market.
Under the plan, both Fannie Mae and Freddie Mac would revert to being private companies once the Federal Housing Finance Agency determines they can “operate safely and soundly without posing an undue systemic risk.”
The Treasury’s plan would also allow the firms to retain more earnings and expand their capital buffers, but they would be required to pay an “appropriately priced periodic commitment fee” for continued government protection.
Additionally, the Treasury would seek to “level the playing field” and promote private-sector competition for the two firms in the housing finance system.
In March, the Government Accountability Office warned that Fannie Mae, Freddie Mac and other government agencies are exposing taxpayers to potential losses of trillions of dollars.
Shortly afterward, President Donald Trump signed a memo calling on the Treasury and Housing and Urban Development departments to end the conservatorship of Fannie Mae and Freddie Mac after the government took control of them during the 2008 financial crisis.
