The Slatest

Slatest PM: Obama Talks Freddie and Fannie’s Future

US President Barack Obama speaks on home ownership for the middle class at Desert Vista High School on August 6, 2013 in Phoenix, Arizona

Photo by Mandel Ngan/AFP/Getty Images

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Freddie and Fannie’s Future: New York Times: “In another sign that the housing market has strengthened, President Obama on Tuesday outlined his long-awaited ideas for overhauling the mortgage finance giants Fannie Mae and Freddie Mac to significantly reduce the government’s risk in any future credit crisis. … Obama endorsed bipartisan efforts in the Senate to wind down the two companies and end their longtime implicit guarantee of a federal government bailout. That dread prospect, once thought improbable, was realized in the fall 2008 financial crisis; Fannie Mae and Freddie Mac, then bankrupt, were rescued by the government at great cost to taxpayers, who only now are being repaid. The president made clear that he will only sign into law a measure that puts private investors primarily at risk for the two companies, which buy and guarantee many mortgages from banks to provide a continuing stream of money for lenders to provide to additional home buyers. (Read the full text of his speech here).

Instant Analysis: Matthew Yglesias in Slate: “In the short-term, Obama is more ambitious looking to drive forward a handful of new initiatives to make it easier for people to refinance or for people with past distressed debt but current stable jobs to get loans. If we did everything the president suggests, it would definitely give the economy a short-term boost. But the longer-term vision is timid. From one point of view, it’s reassuringly timid. The idea is to resolve some of the most egregious problems with the old system and avoid creating any massive new problems. But from another point of view it’s a bit strange to come out of a massive crisis with its origins in the housing sector and the cult of homeownership and come out of it with a reform agenda that very much doubles down on that very same cult.”

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A Few More Quick Hits from Slate:

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