White House: Fannie, Freddie Reform Proposal by January 2011by Tim Manni
According to the Treasury, the White House will present a proposal for the reform of Fannie Mae and Freddie Mac to Congress by January 2011:
[Yesterday], the Obama Administration announced expanded opportunities for public engagement on the future of our nation’s housing finance system, including Fannie Mae and Freddie Mac. These events, which will include a major conference in Washington, D.C., will help provide critical public input as the Administration continues its work developing a comprehensive housing finance reform proposal for delivery to Congress by January 2011.
We really don’t see a coherent, well-thought-out proposal being delivered to lawmakers in less than six months. Here are a few reasons why:
1. There will be a new Congress. Congressional elections occur in November and the new Congressmen will just be getting to work by the start of the year.
2. Six months is not enough time. “The complexities of the GSEs, their role in the market dysfunction and how to create new entities will require exhaustive review and study to produce solid proposals for discussion,” said HSH VP Keith Gumbinger. “Six months isn’t nearly enough time.”
3. Getting it wrong. This reason is short and simple: getting the reform of Fannie and Freddie wrong could be devastating to the market’s recovery.
4. They may not want to alter it. It’s certainly not out of the realm of possibility that come January, the White House will delay the debate of Fannie and Freddie for another year so it becomes another administration’s problem to worry about. Furthermore, by 2012, the market may have recovered to a point where Fannie and Freddie can re-emerge into the market without having to undergo too many changes.