Changes Coming from Fannie Mae and Freddy Mac

The Obama Administration to outline changes for Fannie and Freddie. There will be a hearing on this tomorrow but the Obama Administration will only "outline broad principles".

In a hearing Tuesday the Obama Administration for an exit strategy for Fannie Mae and Freddie Mac. "Its clear that Fannie and Freddie, as they currently exist, should be put out of existence, which means the important question is what kind of entities public and private will replace them.," says Rep Barney Frank (D-Mass), chairman of the House Financial Services Committee. He has called Timothy Geithner to testify at the hearing before his committee on how to do that.

The Administration will outline broad principles for the future of the mortgage market at the hearing, including stronger consumer protections and explicit guarantees for any government backstop of mortgages.

"The housing finance system cannot continue to operate as it has in the past," Mr. Geithner said in prepared testimony. The administration won't issue a detailed overhaul proposal until later in the year.

In 2008 the government siezed both Freddie and Fannie and currently has 5 Trillion dollars of mortgages that they own or guarantee.