The housing market cannot function without the support of the federal government and its captive mortgage-finance agencies, Fannie Mae and Freddie Mac, Treasury Secretary Timothy Geithner said this week. Geithner spoke at a Treasury conference convened to generate ideas for reworking the government role in the mortgage market.
Several economists and financial executives at the conference argued for abolishing Fannie and Freddie, which currently buy two-thirds of U.S. mortgages. The government has spent more than $150 billion to cover their losses. Geithner favors revamping the companies, arguing that mortgage lending would dry up in their absence.
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