One year after the fall of Fannie Mae and Freddie Mac, Edward DeMarco, acting director of the Federal Housing Finance Agency, told CNBC that the government made the right decision by taking the mortgage giants into conservatorship.
"We wanted to restore confidence in Fannie and Freddie, we wanted to enhance their ability to remain active participants in the US mortgage market and we wanted to mitigate systemic risk," DeMarco said. "I think we have accomplished that objective."
Now that Fannie and Freddie account for three-fourths of the mortgage market, there's still a lot to be figured out, DeMarco said. The Mortgage Bankers Association developed a proposal for smaller entities to take the place of Fannie and Freddie, and other plans are sure to follow. DeMarco said all of these ideas should be seriously considered by the government.
Still, DeMarco said with the situation they were dealt, their role with Fannie and Freddie was the best they could to prevent an already bad situation from getting worse.
"Their presence, with the support being provided by the Treasury Department, being provided by the Federal Reserve, has been essential to providing an important measure of stability to the US mortgage market during a very difficult time.
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