Obama plans to reform Fannie Mae, Freddie Mac
Washington: US President Barack Obama has proposed a plan to wind down the two mortgage finance giants, Fannie Mae and Freddie Mac.
"For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag," said Obama Tuesday in Phoenix, Arizona.
He added: "It was heads we win, tails you lose. And it was wrong."
Fannie and Freddie collapsed in 2008 before being bailed out with almost $200 billion in taxpayer funds.
As the housing market showed signs of steady recovery, Obama for the first time in his remarks supported efforts in the Senate to reform the two mortgage giants, Xinhua reported.
Besides, Obama also laid out four principles for the reform.
First, private capital should be the backbone of the housing market, while the government must take a limited role.
Second, there will be no more taxpayers' money on the hook for irresponsibility or bad decisions.
Third, the safe and simple mortgage products like the 30-year, fixed-rate mortgage should be preserved.
Fourth, housing should be kept affordable for first-time buyers and rental housing should be affordable for those who are not ready to buy.