Andrew Jakabovics, Associate Director for the Economic Mobility Program, made the following statement on the government takeover of Fannie Mae and Freddie Mac.
September 10, 2008 (PRESSbooth.ORG) -- "Actions taken over this weekend by Treasury Secretary Paulson to place Fannie Mae and Freddie Mac in conservatorship staved off a liquidity crisis by keeping money flowing for home mortgages, but we must be absolutely clear that those actions do not address the existing housing crisis directly. It does, however, create an opportunity for Treasury to stabilize local housing markets through wholesale restructuring of loans it now holds or controls in conservatorship. The current housing crisis has been precipitated by an excess of loans issued using shoddy underwriting standards and/or difficult loan terms. By restructuring or refinancing those loans already delinquent or in default and those likely to soon follow into loans that the borrower can sustain, local housing markets will no longer be threatened by a flood of foreclosures and will be able to return to normal functioning. Given that the taxpayer is potentially on the hook for the GSE debt, maximizing the returns on the outstanding loans is in our collective best interest. To that end, American taxpayers do better when Treasury refinances or restructures the outstanding troubled mortgages to provide lower interest rates or loan balances (even if they don’t get one themselves) than having it sitting on a pile of delinquent, non-performing loans leading to foreclosures next door. "
The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all. We believe that Americans are bound together by a common commitment to these values and we aspire to ensure that our national policies reflect these values. We work to find progressive and pragmatic solutions to significant domestic and international problems and develop policy proposals that foster a government that is "of the people, by the people, and for the people."
Andrew Jakabovics is available for interviews.
Contact:
Andrea Purse,
202.446.8429,
apurse @ americanprogress.org
Center for American Progress,
1333 H St. NW,
Washington,
DC 20005-4707
United States
:: 
:: 
::
