The Obama administration confirmed on Wednesday that it will wait until next year to put forward legislation on Fannie Mae and Freddie Mac. That’s not a huge surprise: the administration has a lot on its plate, and some analysts have long said it was unrealistic to expect any action before midterm elections this fall.
Moreover, the mortgage market’s current arrangement, while far from an ideal long-term fix, appears to be holding together and helping to revive what had been a very sick housing patient. Even if Congress and the White House knew what it wanted to do with Fannie and Freddie (which it doesn’t), right now could be a dicey time to attempt anything terribly dramatic. The Federal Reserve is winding down its purchases of mortgage-backed securities in the next month, and the home-buyer tax-credit will expire after that.
Still, that doesn’t change the tough politics facing the White House in delaying action on Fannie and Freddie. (Last summer, the White House promised to put out something when it released its budget proposal earlier this month.)
On one hand, Treasury Secretary Tim Geithner has spent the better part of a year arguing that the greatest financial crisis since the Great Depression demanded quick action to overhaul regulation for the financial-services industry. But at a congressional panel on Wednesday, Mr. Geithner invoked the housing crisis as a reason against moving quickly on Fannie and Freddie. “We want to make sure that we are proposing these changes at a time when we have a little bit more distance from the worst housing crisis in generations,” he said....MORE, including some of the proposals.
We linked to the Heritage Foundation's thinking earlier this morning in "Freddie Mac ‘may need’ support" (FRE; FNM)