Obama Administration To Wean CUs, Banks Off Fannie Mae, Freddie Mac
WASHINGTON – The Obama administration is planning the wind down of Fannie Mae and Freddie Mac and will begin the process of encouraging more private sector involvement in the secondary mortgage market, a top administration official said yesterday during CUNA’s Government Affairs Conference.
“The administration is committed to a system in which the private market – subject to strong oversight and strong consumer and investor protections – is the primary source of mortgage credit,” said Treasury Department Undersecretary Jeffrey Goldstein.
The Treasury Department will work with Congress and the Federal Housing Finance Administration to rein in Fannie Mae and Freddie Mac, but will take immediate steps on its own, Goldstein said. “There are a number of policy levers the administration can use to do wind down these two institutions. They include gradually increasing guarantee fees, raising capital standards, and increasing down payment requirements – and we will work with FHFA to begin this process immediately.”
The Treasury official also said the administration has asked for $91 million over the next two years to continue expanding the Bank On... program discouraging unbanked Americans to open accounts with banks and credit unions and is counting on credit unions to grow the program. “Credit unions provide essential opportunities for millions of Americans to access mainstream financial services,” said Goldstein. “Those who lack credit union membership or bank accounts are often left to rely on alternative, high-cost financial service providers to cash checks, pay bills and send remittances.”
Credit unions participating in Bank on San Francisco, Bank on San Antonio and programs in several other cities have added thousands of unbanked to their membership over the past two years.