WASHINGTON -- With consistent housing recovery in the past years, U.S. President Barack Obama proposed a plan in Phoenix, Arizona on Tuesday to wind down 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, adding "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 dollars in taxpayer funds.
As the housing market showed signs of steady recovery, Obama for the first time in his remarks supported bipartisan efforts in the Senate to reform the two mortgage giants.
Besides Obama 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.
Phoenix is a typical example to demonstrate the depths of the housing bust and its current obvious recovery. The city's housing equity lost 7 trillion dollars in value during the housing crisis, and while the market is still well below its pre-housing crisis height, the median single-family-home price rose again to 185,000 dollars, up about 26 percent from May of last year.
In choosing Phoenix, Obama spotlighted his ideas for creating jobs and promoting growth and meanwhile hammered Republicans for not supporting him in the Congress.
