The future of two U.S. government-sponsored mortgage giants will certainly fall in the hands of a new administration in Washington, political observers said.

U.S. Treasury Secretary Henry Paulson Jr. has said he will leave his position in January, leaving the fate of the Federal Home Mortgage Corp. and the Federal National Mortgage Association to his successor, the new president and Congress.

Republican candidate John McCain has said Freddie Mac and Fannie Mae should be downsized or closed, The Washington Post reported Monday.

The takeover announced Sunday includes a plan to shrink the size of the firms by 10 percent each year.

Democratic candidate Barack Obama's economic policy director, Jason Furman, said the root of solving it is how to disentangle the public functions ... from the things that the private sector can and should be doing.

The two companies are hybrids: private firms that make money for shareholders but which are allowed to borrow money from the government at low rates due to their missions of supporting affordable housing. The companies could remain hybrids, go completely private or become nationalized, which would make them, essentially, government agencies, the Post reported.

Copyright 2008 by United Press International


Publication date: 08 September 2008   

Source: UPI-1-20080908-09261200-bc-us-mortgages.xml

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