Obama declares Fannie, Freddie model ‘dead’

By Associated Press
Posted Feb. 11 at 8:00 a.m.

The Obama administration on Friday declared the public-private housing finance model in place for the past four decades was dead but pledged to continue backing exisiting obligations of Fannie Mae and Freddie Mac.

“The GSE model is dead,” an Obama administration official told reporters as the Treasury Department released a long-awaited report on options to revamp housing reform.

The Obama administration is laying out three broad options for overhauling the mortgage lending system, but will let Congress make the final decision.

The Treasury Department says in a report released Friday that the government should withdraw its support for the mortgage market slowly, over five years or more. The report describes a path for winding down the troubled mortgage giants Fannie Mae and Freddie Mac.

The three options are: end the government’s role in guaranteeing most mortgages; support the mortgage market only in times of stress; or provide a government guarantee for mortgage investments created by private companies.

The bailouts of Fannie and Freddie have cost taxpayers nearly $150 billion.

Read more about the topics in this post: , , ,

Companies in this article

Freddie Mac

Read more about this company »


  1. charles robb Feb. 11 at 8:22 a.m.

    Thank you Barney Frank.

  2. 007 Feb. 11 at 8:28 a.m.

    And Chris Dodd.

  3. Duhur Feb. 11 at 8:59 a.m.

    And Franklin Raines and Jamie Gorelick……and Rahm, too.

  4. Erik Feb. 11 at 10:19 a.m.

    well….at least they’re moving in the right direction.
    Absurdly expensive lesson though….

  5. Chazz Feb. 11 at 1:34 pm

    It is remarkable to me that the Democrats continue to blame Bush and the Republicans for the housing crash…when anyone who has done their homework knows Barney and his merry band of socialists forced the mortgage industry into providing loans to people who could not qualify under normal terms for home loans…by threatening to revoke their licenses…then, when the mortgage industry dind’t blink…the feds said they’d guarantee the bad loans…voila…housing crisis…but listening to msnbc…you’d think just the opposite….

  6. BK Feb. 11 at 2:55 pm

    Be careful what you wish for. People want to “blame” FNMA and FHLMC but without them most of you would not be in homes right now. They were created for a reason that worked for years. The housing debacle was NOT the fault of FNMA and FHLMC. Are they bloated Government entities at this point? Without a doubt. But they had little or nothing to do with the Subprime mess. Those of you stamping your feet and blaing FNMA and FHLMC for the mess have no clue as to what happened in the housing debacle.

    Look for rates to rise (a lot) and home prices to continue to decline. It will be interesting just who wants to back these trillions of dollars that FNMA snd FHMLC have been backing for years. Any of you want to invest in mortages these days? A show of hands? I thought not.

  7. BK Feb. 11 at 2:56 pm


    You dont know what you are talking about. Trying to point the blame at either political party shows you dont have a clue as the mechanics of the mortgage business.

  8. Perry Mason Feb. 11 at 3:30 pm

    Whomever did the underwriting should KEEP the loan on THEIR books and not try to dump their deadbeat customers on us.

  9. Greg Feb. 11 at 3:45 pm

    BK, actually both political parties are to blame. Read “The Devils are all here.” Republicans and Democrats both set the groundwork for the entire mess dating back to the ’70’s. Fannie Mae and Freddie Mac had their greedy little fingers in the pie just like Wallstreet did. Congress removed the safeguards meant to prevent a repeat of the stock market crash of 1929. Big surprise, the stock market crashed exactly the same way at the start of our current mess as it did in 1929, with exactly the same results.

    Wallstreet, the banks, and Fannie Mae and Freddie Mac collapsed the economy, but only after Congress set the conditions that allowed it to hppen and gave their blessing to all parties involved. And notice that Congress also turned around and rewarded all parties for doing it (bailouts and stimulus, anyone?).

  10. BK Feb. 11 at 3:58 pm

    Baloney. No one was forced to take a mortgage. People used the mortgage business to purchase a multitude of things they could not afford. Not just homes.

    Wall Street, the banks, FNMA and FHLMC were the guns…..but greeedy, irresponsible, short-sighted borrwers pulled the trigger…with the gun pointed at themselves.

    Good grief. Stop blaming everyone/everything but YOURSELF for your own bad decisions. Look in the mirror people.

  11. Greg Feb. 12 at 10:50 a.m.

    And I suppose that by your logic, the homeowners were also at fault for the collapse of the internet bubble, and also at fault for the Enron debacle as well.

    Loans were originated with the upfront knowledge that it was a bad loan, but the originator got their capital back when the loan was bundled into a security and sold off. Therefore the originator held absolutely no risk in the outcome of their decisions.

    Additionally, out of 50 state governments and a federal government, how many are running with budget deficits? And most, if not all, of those deficits were there prior to the market collapse. I suppose that is the homeowners’ fault as well?

    Let’s not forget that a lot of people who didn’t make bad decisions regarding a mortgage ended up in default all the same because of lost jobs. Afterall, unemployment doesn’t pay the bills for a lot of people, it only slows the reduction in their life savings.

    But then, people who offer a very simplistic explanation for everything are nothing more than blowhards, just like the talking heads on MSNBC, Fox, et al.