STOCK MARKET WATCH -- Monday, 16 January 2012

[Demeter]

24. Fannie, Freddie overhaul unlikely

http://thehill.com/blogs/on-the-money/1091-housing/204163-overhaul-of-fannie-mae-and-freddie-mac-unlikely-this-year

An overhaul of Fannie Mae and Freddie Mac is unlikely again this year despite recent Republican efforts to move the issue up the agenda. Congressional Republicans, along with some Democrats — and even GOP presidential candidate Newt Gingrich — are renewing calls to craft an agreement to reduce the involvement of Fannie and Freddie in the nation's mortgage market. But without a broader accord, passage of any legislation this year is slim, housing experts say.

Jim Tobin, senior vice president of government affairs for the National Association of Home Builders, concedes that despite a mix of Democratic and Republican proposals, including a push by the Obama administration last year, congressional leaders probably won't get far this year on a plan for Fannie and Freddie, the government-controlled mortgage giants. Tobin said there are "good ideas out there" and while he expects the House to put some bills on the floor and possibly pass legislation, the Senate is likely to remain in oversight mode without any "broad-based legislation on housing finance...We're bracing for a year where it's difficult to break through on important policy issues," he said this week. While the issue makes for a good talking point, especially in an presidential election year, congressional efforts are largely being stymied by the housing market's sluggish recovery, prohibiting the hand off between the government and private sector in mortgage financing, housing experts say. David Crowe, chief economist with NAHB, said that the market has hit rock bottom and is now undergoing a "slow climb out of the hole."

The House has taken the biggest steps so far — by mid-July the Financial Services Committee had approved 14 bills intended to jump-start reform of the government-sponsored enterprises. "As we continue to move immediate reforms, our ultimate goal remains, to end the bailout of Fannie, Freddie and build a stronger housing finance system that no longer relies on government guarantees,” panel Chairman Spencer Bachus (R-Ala.) said last summer. Meanwhile, a number of GOP and bipartisan measures have emerged — Democrats and Republicans generally agree Fannie and Freddie are in need of a fix but their ideas still widely vary. There are a handful of bills floating around Congress, including one by Reps. John Campbell (R-Calif.) and Gary Peters (D-Mich.), and another by Reps. Gary Miller (R-Calif.) and Carolyn Maloney (D-N.Y), which would wind down Fannie and Freddie and create a new system of privately financed organizations to support the mortgage market.

"Every one of those approaches replaces them (Fannie and Freddie) with what they think is the best alternative to having a new system going forward that would really fix the problem and would really give certainty to the marketplace and allow housing finance to come back, and therefore housing to come back, as well," Campbell said at a markup last month.

FANNIE AND FREDDIE WERE FINE--UNTIL THEY WERE FORCED TO BE PRIVATIZED--SOLD OFF TO THE HIGHEST BIDDERS, IN OTHER WORDS...