President Obama today will outline his long-awaited ideas for overhauling the mortgage finance giants Fannie Mae and Freddie Mac to significantly reduce the government’s risk in any future credit crisis, the New York Times reported today. Obama will endorse bipartisan efforts in the Senate to wind down the two companies and end their longtime implicit guarantee of a federal government bailout. The president, according to administration officials, will make clear that he will only sign into law a measure that puts private investors primarily at risk for the two companies, which buy and guarantee many mortgages from banks to provide an ongoing stream of money for lenders to provide to additional home buyers. An acceptable measure also must specify the government’s role and liabilities for Fannie Mae and Freddie Mac, the officials said, and — unlike legislation in the Republican-controlled House — must ensure Americans’ continued access to a 30-year mortgage at a fixed interest rate. House Republicans would let the market determine whether to provide the long-standard mortgages, but the White House and the bipartisan Senate groups say that would make a 30-year, fixed-rate mortgage harder to get and more costly.
