Geithner biennial sets target for housing finance reform

Secretary of the Treasury Timothy f. Geithner saidF.
House Committee on financial services today that Congress must meet reforming
Freddie Mac and Fannie Mae, or Government-sponsored enterprises (companies)
will only return to their old form.

Geithner prepared testimony before the
The Committee was based on the Administration the white, Obama has delivered two weeks
to outline its vision for reforming housing financing market.  In this vision, "said the Secretary of the Treasury
the basic role of the Government of will be limited to consumer protection and supervision,
targeted assistance to low-and moderate-income-interest and renters; (i)
targeted capacity to promote market stability and crisis response.

In other words, is the administration of the
DETERMINED the system of private market subject to the supervision of the strong, consumers and
the protection of investors and where the private market, not American taxpayers
bear the burden for loss.

Geithner
criticized for a long time the role of Government in housing finance for supporting incentives
that created significant market distortions, moral hazard and ultimately
left taxpayers responsible for the resulting MESS.  While all Americans should have access to
affordable quality housing , said the objective should not be for every American
To become just thecicielem House for rent.  Targeted and
effective support should be available for families who have a financial
the ability to own a home but are billion private market coupled with the
the range of options for the Americans, who rent.

On
with winding stressed important and Freddie, Fannie, and the careful
the pace of the intended as no shock there is already a fragile housing market and the said
This can be achieved by:

• Gradually
  increase of the price guarantee for enterprises as if they were held to
  the same standards of capital as a private institution;
• To Reduce The
  conforming loan limits by allowing temporary increases enacted in 2008 to
  expire as scheduled on October 1, 2011
• Gradually
  an increase in the amount of private capital that the risk of losing ahead of taxpayers through
  credit losses in the economy and gradually increased down payment requirements;
• Still
  the wind, as a general rule, investment portfolio companies amounting to not less than ten
  per cent per annum.

As
Decreased presence of enterprises, Geithner said the Administration will also
Scale Back FHA "to his more traditionally-oriented role."  The maximum size of the loan should be reduced, and
After the return to the levels of pre-2008, should consider whether further reduction
are justified.  The pricing of FHA
mortgage insurance should also increase beyond two rounds of price increases
already adopted, both to reinforce the account capital reserves and align its
Structure about pricing and availability of a more appropriate relations with the private sector.

The
The Administration also supports reform of the Federal home loan banks (FHLBs) by
initiating a single division membership, limiting the level of advances to each
institution and the reduction of the FHLB investment portfolio.

The Government Of
Administration reform, Geithner said, is only half the picture.  "We have also achieved reforms,
restore confidence in the mortgage market among borrowers, lenders, and
investors. "  Laid down in the Act of Dodd-Frank
laying the foundations for many of these reforms and the Treasury is to coordinate changes
on the securitization market will require creators and securitizers to
maintain financial risk shortly adopt the Bureau of consumer protection
authority of the occurrence of abuse and to promote thechoice for consumers.  Carried out are also changes to the capital of the Bank
standards and reform to the servicing industry.  National include design
support for standards and identify ways to reduce conflicts of interest between
holders of mortgages the first and second and improving incentives for servicers to
Working withthe troubled borrowers.

Geithner
He said the Administration has set out three possible options for the structure of Government
support in the housing finance market, where the private sector is dominant
Supplier credit and mortgage risk bearer. 
In each, would support the Government's "clear, explicit, and
Limited "and each would help FHA and similar Government
initiatives that help targeted groups such as the low-and moderate income households
families, farmers, and veterans.

The
The first option would limit the role of the Government almost exclusively to these targeted
assistance initiatives.  The Vast
The majority of mortgages should be financed by the private sector, and not
take advantage of the Government guarantee.

The
the second option would complement targeted aid although FHA and other initiatives
to backstop the Government with a view to promoting stability and access to mortgage loans
credit market in times of tension.

The
The third option would be the Government, in addition to the FHA and targeted
initiatives to aid, the provision of reinsurance for certain securities, which would be
be backed by mortgages of high quality. 
These securities would be guaranteed by private strictly regulated
companies under stringent standards of equity and strict supervision and is reinsured
by the Government which would charge a premium to cover future claims and would be
After private guarantors are zaprzepaszczeniu only pay those claims.

Geithner said in his prepared remarks that he hoped financing reform of the legislation of the housing complex will pass congressional vote within two years. He added, "idle exacerbate market uncertainty and the risk of leaving many of the defects in the market
has brought us to this point firstly not included. "

After
overnight, members of the Committee questioned the Geithner about the costs associated
in these options.  , The Secretary said
that the costs to the consumer will be higher in each of the reforms, but
in accordance with the first reform would be higher than in the second or third.  Each
the medium-term reform presented will require action by Congress, the Secretary
He said, but by providing a set of options, and key criteria by which they
should be assessed, the Administration hopes that encourage conversation honest
about the pros and cons of each.

 

Below you can find quick reminder Geithner in response to Congressional questions which, after his prepared testimony.

RTRS-U.S. f. GEITHNER TREASURY SAYS 90 PCT ROLE for GOVT BACK MORTGAGES NECESSARY NOW, BUT NOT in the future

RTRS-U.S. TREASURY'S GEITHNER SAYS THE HOUSING SLOWDOWN WOULD BE MUCH MORE SEVERE WITHOUT THE SUPPORT OF FANNIE, FREDDIE

RTRS-U.S. TREASURY'S GEITHNER SAYS, LEAVING ONLY BACKER AS FHA MORTGAGES CANNOT ACTUALLY REDUCE TOTAL GOVT ROLE IN HOUSING MARKET

RTRS-F. GEITHNER-THE CONGRESS YOU CAN STIR THE OPTIONS PROPOSED BY THE TREASURY ON FANNIE, FREDDIE REFORM

RTRS-F. GEITHNER SAYS NO GUARANTEE THAT THE PRIVATE SECTOR WILL STEP BACK INTO THE MORTGAGE

RTRS-F. GEITHNER-IN ALL THE OPTIONS FOR REFORM, FHA MUST BE ABLE TO PROVIDE MORTGAGES FOR LOW/MODERATE INCOME FAMILIES WITH MODERATE PREPAYMENT

RTRS-F. GEITHNER SAYS TERMINATING MORTGAGE MODIFICATION PROGRAMS WOULD RESULT IN A LOT OF DAMAGE TO THE FRAGILE HOUSING MARKET

RTRS-U.S. TREASURY'S GEITHNER SAYS FANNIE FREDDIE GUARANTEE OPTION EXPLICIT HAS "A LOT OF MERIT"

RTRS-F. GEITHNER IS HARD TO KNOW IF THE HOUSING MARKET IN THE UNITED STATES HAS BEEN REVERSED

RTRS-F. HOUSING MARKET STILL GEITHNER-HAS A LOT OF DAMAGE TO ABSORB; NEEDS TIME TO RECOVER

RTRS-F. GEITHNER SAYS DON'T LOOK TO THE EUROPEAN SYSTEM OF HOUSING FINANCE AS A REFERENCE MODEL, A ROLE FOR THE UNITED STATES