Posted on Saturday, January 22, 2011
As the government struggles to revamp Fannie and Freddie, big banks are trying to capitalize on changes to the government sponsored enterprises.
Treasury Secretary Tim Geithner is expected to release a report on changes to Fannie and Freddie later this month, and banks want in, the New York Times reports.
The banks want to help bundle mortgages into securities backed by the U.S. government - the role currently played by Fannie Mae and Freddie Mac. Securities backed by the government are considered safer than private securities.
There is broad bipartisan agreement that much-malinged Fannie and Freddie need an overhaul. The mortgage giants have cost taxpayers roughly $150 billion in the two years since they were nationalized, after backing more than $1 trillion in risky and subprime mortgages. The firms effectively became wards of the government, triggering widespread calls for reform.
Republicans have already announced plans to introduce legislation to shut down Fannie and Freddie. Key GOP members of the Financial Crisis Inquiry Commission, a panel charged with investigating the causes of the downturn, have already released their own report blaming Fannie and Freddie for fueling housing crash.
Executives from Goldman Sachs, Morgan Stanley, Credit Suisse and Wells Fargo reportedly met with Treasury officials to argue their case.
The Huffington Post Yepoka Yeebo