Obama reopens issue on housing reforms
US President Barack Obama recently revisited the issue on the need for major reforms on the housing market policies. In his speech last week, Obama highlighted the roles Fannie Mae and Freddie Mac played to cause the country to go into economic recession.
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) caused the housing market to broke down through its low-quality home loans. "For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag," said Obama.
Although the US government under the Obama administration bailed out the two federal agencies for USD200 billion in 2009, the financial crisis led to millions of people losing their jobs and default their home mortgage payments.
Currently, Fannie Mae and Freddie Mac have recovered after a considerable infusion of capital. To their credit, Fannie Mae and Freddie Mac's USD15 billion in contributions to the US Treasury in turn helped reduced government deficits.