Some Things Change Some Things Stay the Same

Treasury Secretary Geithner testified today that the federal government will continue to play a key role in the nation’s housing finance system as Congress begins to revamp Fannie Mae and Freddie Mac.

Geithner told the House Financial Services Committee that the two mortgage giants’ government-sponsored enterprise structure could not continue, especially after the federal government took them over two years ago and has committed to purchase more than $125 billion in preferred stock.

Government has a key role to play in that new system, but its role, and the role of the GSEs in particular, will be fundamentally different from the role played in the past. Private gains can no longer be supported by the umbrella of public protection; capital standards must be higher; and excessive risk-taking must be appropriately restrained,” Geithner said in prepared remarks.

You might think that enough is enough for Geithner but not yet.

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