Frank: Abolish Fannie and Freddie?; "come up with a whole new system"Submitted by SteveMT on Sat, 01/23/2010 - 14:42
Abolish two companies guaranteeing $5.5T in loans?
Charlton Ogburn (1911–1998): "We trained hard, but it seemed that every time we were beginning to form up into teams we would be reorganized. Presumably the plans for our employment were being changed. I was to learn later in life that, perhaps because we are so good at organizing, we tend as a nation to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralization."
Rep. Frank: Abolish Fannie Mae, Freddie Mac
Rep. Barney Frank calls for replacement of mortgage finance giants Fannie Mae, Freddie Mac
By Alan Zibel
Friday January 22, 2010, 5:12 pm EST
WASHINGTON (AP) -- A top lawmaker on Capitol Hill is calling for the elimination of mortgage finance companies Fannie Mae and Freddie Mac and the establishment of a new system to provide money for U.S. home loans.
Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said Friday he supports replacing the two companies entirely.
"I believe this committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," Frank said at a hearing on executive compensation issues. "That's the approach, rather than the piecemeal one."
His comments show how much the financial crisis has upended the relationship between lawmakers and the two companies. Frank was long one of the staunchest supporters of Washington-based Fannie Mae and Freddie Mac, based in McLean, Va.
The two companies, which have been run by the government since they almost collapsed in September 2008, have required $111 billion in federal aid to stay afloat. Late last year the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion.
Regulators announced last month the CEOs of Fannie and Freddie could get paid as much as $6 million for 2009. That has outraged Republican lawmakers on Capitol Hill.