U.S. official suggests privatizing Fannie Mae, Freddie Mac


April 24, 2005|By Bloomberg News

Fannie Mae and Freddie Mac no longer need federal benefits to support the U.S. housing market, allowing Congress to strip them of government sponsorship and reduce risk to taxpayers, the Congressional Budget Office says.

Fannie Mae and Freddie Mac "could gradually be relieved of the responsibilities and benefits of their current status as government-sponsored enterprises and be required to operate as fully private organizations," Douglas Holtz-Eakin, the budget office's director, told the Senate banking committee Thursday.

Congress is considering creating a stricter regulator to reduce faulty accounting of the companies' $1.5 trillion mortgage portfolios. The agencies have disclosed more than $13 billion in bookkeeping irregularities.

"I'm not pushing for the total privatization" of the agencies, Republican Sen. Richard C. Shelby of Alabama said later.

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