Immediate Steps to Protect Taxpayers from the Ongoing Bailout of Fannie Mae and Freddie Mac

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In its February 11 Report to Congress, the Obama administration asked Congress to work with it to fashion legislation to accomplish three broad goals of housing finance market reform:

  • The winding down of Fannie Mae and Freddie Mac (the GSEs);
  • Returning FHA to its traditional role a targeted lender of affordable mortgages; and
  • A largely privatized system of housing finance with an open question as to the level of government involvement.

These three goals provide the opportunity for a possible bi-partisan solution that could result in true reform of our housing finance market. I congratulate this subcommittee for its contributions towards achieving this consensus that the GSEs must be wound down. I will address this opportunity later on in my testimony.

Secretary Geithner in testimony before the full Financial Services Committee on March 1 asked that these three goals be accomplished sooner rather than later during this Congress. It is therefore a pleasure to testify today on the thrust of these eight proposed bills which aim to move forcefully forward on achieving this necessary and critical goal.

Edward Pinto is a resident fellow at AEI.

 

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About the Author

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org

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