Influential Congressman Barney Frank on Friday recommended “abolishing” troubled quasi-government mortgage companies Fannie Mae (FNM) and Freddie Mac (FRE).
Frank, D-Mass., chairman of the powerful House Financial Services Committee, said Fannie and Freddie should be replaced by “a whole new system of housing finance.”
“That's the approach, rather than the piecemeal one,” Frank said his committee will take toward the two mortgage giants.
Fannie and Freddie were created to ensure liquidity in the U.S. housing market and did so successfully until the inflated real estate market collapsed about three years ago and millions of Americans began defaulting on their mortgages.
Facing bankruptcy, the two entities were taken over by the U.S. government in 2008 and so far have absorbed more than $100 billion in taxpayer funded bailouts between them.