This article was originally published by the Fiscal Times on Thursday, Jan. 20, 2011.
With a Jan. 31 deadline looming for making recommendations, the Obama administration is badly divided over how to reform Fannie Mae and Freddie Mac, the financially strapped and controversial mortgage giants.
By Katherine Reynolds Lewis
The Obama administration is sorely divided over how to reform Fannie Mae and Freddie Mac, the controversial mortgage giants. Sources familiar with the discussions raise the possibility that the White House will miss its statutory deadline for submitting recommendations to Congress.
• Eliminating the agencies and relying on the FHA to guarantee loans for low-income homebuyers, while the private sector serves middle- and upper-income families.
• A hybrid public-private model that insures mortgages and has an explicit government guarantee.
• A heavily regulated system designed like a traditional electric utility, with the government regulating fees that could be charged to consumers.
• A cooperative model similar to the Federal Home Loan Bank system, in which member banks are shareholders in the overall institution.