Geithner: Housing Finance System 'Not Tenable'
In opening remarks today at the US Treasury building in Washington DC, Secretary Tim Geithner said that the United States government is on the side of "fundamental change," when it comes to reforming the government sponsored entities, Fannie Mae and Freddie Mac. "It is not tenable to leave in place the system we have today," he told the crowd of journalists and mortgage finance players gathered in the Cash Room for today's Conference on the Future of Housing Finance. Geithner said that the government will assist in the planned write down of GSE portfolios. "We need to make it absolutely clear the GSEs have the resources to meet their financial commitments," he said. Geithner joked that he was excited to see people working in Washington in August and added that there is nothing the government can do to decrease the losses at the GSEs. "All we can do is minimize the risk that they get worse." At its peak, the GSE mortgage-backed securities stood at $1.6trn, made possible by lax underwriting and the belief that these bonds carried a government guarantee, he said. Geithner added that it is a "myth" to believe that taxpayers are being exposed to more losses at Fannie and Freddie. Write to Jacob Gaffney.