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Tuesday, February 9, 2010

White House trusts real estate business in company hands

The real estate business remain in the hands of Fannie Mae and Freddy Mac as the two companies were given a total of nearly $111 billion by the US government to but mortgages originated by others. The two companies together fund 90 percent of U.S. mortgages even an year after the global financial meltdown.
Fannie and Freddie had been keeping the mortgages as investments and repackaging other for sale to investors as securities. The companies have also helped in reinstalling the lending by state and local housing-finance agencies by guaranteeing $24 billion in debt. The apartment also gets a helping hand from the companies as they are lending it to builders and buyers.
The situation would probably go on for a while as Obama can bypass Congress by relying on Fannie and Freddie. Daniel Mudd, the former CEO of Fannie Mae criticizes that the government is running Fannie and Freddie as an instrument of national economic policy, not as a business. He had been forced out of the company in September 2008 as government took control of it.
However, Assistant Treasury Secretary Michael Barr defends the allegation by saying that Fannie and Freddie are owned by the taxpayers in the middle of the biggest housing crisis in 80 year and the administration's actions have been prudent and consistent with taxpayer protection.

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