FHFA head accuses investors of Fannie, Freddie 'amnesia'

by Ryan Smith11 Nov 2013

Ed DeMarco is accusing investors of amnesia as he continues taking steps to bury Fannie Mae and Freddie Mac.

The companies said Thursday that they’d be paying $39bn to the Treasury this quarter, putting them within shouting distance of paying back the nearly $188bn the government pumped into them during the financial crisis. But the acting head of the Federal Housing Finance Agency said he’s afraid investors are forgetting the problems that led to the bailout in the first place.

“I think some people are forgetting a little history,” DeMarco told the Wall Street Journal.

In a speech at the Zillow Housing Forum last month, DeMarco insisted that Fannie and Freddie were still broken despite their record profits.

“As Fannie Mae and Freddie Mac have begun to report positive net income, there may be a growing perception that the problems that led to conservatorship have been fixed,” he said. “That is not the case.”

DeMarco said that until Congress comes to a decision on how to revamp the nation’s housing market, he will continue to “wind up the affairs” of the two companies. That will include further increases in the fees they charge lenders to back mortgages and the selling off of credit risk on mortgages they guarantee, the Journal reported.

DeMarco said he’ll also continue with his plan to reduce the maximum loan limits for the companies, a proposal that is deeply unpopular with industry groups and has stoked the ire of lawmakers who say DeMarco lacks the authority to make that decision.

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