White House Weighs 'Bad Bank' Fix for Fannie, Freddie

By Kevin Spak, Newser Staff

Posted Aug 6, 2009 8:40 AM CDT

(Newser) – The White House’s National Economic Council will meet today to discuss a drastic overhaul of beleaguered nationalized mortgage dealers Fannie Mae and Freddie Mac, the Washington Post reports. Among other proposals, officials are contemplating a “good bank, bad bank” split. Fannie and Freddie would dump their troubled loans on a new, government-created company that would work to collect the outstanding balances, giving the mortgage giants a clean slate.

“It should come as no surprise that the administration is thinking through” drastic changes to the companies, a Treasury spokesman said. In an interview yesterday, the top regulator of Fannie and Freddie said the "bad bank" solution was necessary. Officials will also discuss whether to merge the “good banks” into one government agency, or return to a hybrid public/private model.

In this May 2, 2007 file photo, the Fannie Mae building in Washington is seen. (AP Photo/Manuel Balce Ceneta, File)

In this July 13, 2008 file photo, the Freddie Mac's corporate offices are seen in McLean, Va. (AP Photo/Pablo Martinez Monsivais, File)

In Nov. 11, 2008 file photo, Federal Housing Finance Agency Director James B. Lockhart III, attends a news conference in Washington. (AP Photo/Haraz N. Ghanbari, file)

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$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Freddie Mac Bet Billions Against Homeowners

Has financial stake in limiting refinancing for struggling people

SEC Sues Ex- Fannie, Freddie CEOs

Firms wildly misrepresented exposure to subprime loans: feds

Ex-Banker: Yeah, Collapse Was Our Fault

So why haven't homeowners been bailed out?

Fannie Mae Needs Another $7.8B

Taxpayer bill for mortgage firm's rescue now $94B

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OTHER STORIES ON OUR RADAR

mortgage • Freddie Mac • Fannie Mae • Treasury Department • financial crisis • bad bank • National Economic Council

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Freddie Mac Bet Billions Against Homeowners

Has financial stake in limiting refinancing for struggling people

SEC Sues Ex- Fannie, Freddie CEOs

Firms wildly misrepresented exposure to subprime loans: feds

Ex-Banker: Yeah, Collapse Was Our Fault

So why haven't homeowners been bailed out?

Fannie Mae Needs Another $7.8B

Taxpayer bill for mortgage firm's rescue now $94B

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Newser By Users

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