House Financial Services Committee Chairman Barney Frank said hearing on GSE restructuring has been rescheduled to March 23.
The House Financial Services Committee initially was to meet on March 2 to debate the future of the GSEs and the housing market more broadly. The conclusions lawmakers reach about Fannie Mae and Freddie Mac will have major implications for the Home Loan banks, including how they sell their debt and who regulates them.
According to a Reuters report, Treasury Secretary Timothy Geithner said the Obama administration plans to unveil its proposal until 2011. “We do not think it is necessary to consolidate the full obligations of Fannie and Freddie onto the nation’s budget,” he told the House of Representatives Budget Committee. “But we do think it is important that we make it clear to investors around the world that we will make sure that we will take the actions necessary to keep the two companies stable.”
The Treasury would develop a few “broad principles” for restructuring Fannie and Freddie this year, he added.
The GSE plans are very important and have a lot of potential impacts on the non agency market. At the American Securitization Forum conference held in Washington D.C. at the end of January, securitization industry participants called for a well defined and consistent mission for Fannie and Freddie.
They also asked for a clear demarcation line between the private and public sector roles of these agencies. The industry believes that the firms’ missions should be clearly and separately defined.
The problem is that what incentivize investors to buy these securities are the returns or the ability to purchase them on a risk-adjusted basis, which conflict with the affordable housing part of these agencies’ mission.