FMCC/FNMA Phased Out Under Treasury's Housing Plan

http://www.bloomberg.com/news/2011-02-09/fannie-mae-freddie-mac-could-be-phased-out-under-treasury-s-housing-plan.html "The administration may suggest reducing the size of loans that the government-sponsored enterprises can insure, the people said. Such conforming loans now are capped at $729,750 and will fall to $625,500 on Oct. 1 if Congress doesn’t act... -One of the three options is likely to... [more]

http://www.bloomberg.com/news/2011-02-09/fannie-mae-freddie-mac-could-be-phased-out-under-treasury-s-housing-plan.html "The administration may suggest reducing the size of loans that the government-sponsored enterprises can insure, the people said. Such conforming loans now are capped at $729,750 and will fall to $625,500 on Oct. 1 if Congress doesn’t act... -One of the three options is likely to be a complete government withdrawal from the mortgage-guarantee business now dominated by Fannie Mae and Freddie Mac -A second option would phase out the government’s guarantee of mortgage-backed securities until it is left as an insurer of last resort, stepping in only in the event of a catastrophic market failure. -The third option from the GVT whould be to put taxpayers at risk only after other protections have been breached. “If the government is involved in providing credit guarantees, it should do so only as a deep backstop,” Bernanke told the House Budget Committee today. “The first losses should be borne by the originators of the mortgages or by the securitizers.” [less]