Obama outlines plans to dismantle Fannie Mae and Freddie Mac | World news | theguardian.com
Efforts to unravel housing subsidies that fuelled the financial crash reached a milestone on Tuesday as Barack Obama
said the national housing recovery was now strong enough to begin
dismantling federal mortgage giants Fannie Mae and Freddie Mac.
In a speech in Phoenix,
the epicentre of the housing bubble, the president outlined a series of
steps he said could limit the negative impact on home buyers of
scrapping these billions of dollars in loan guarantees but insisted
there was no alternative if future housing bubbles were to be avoided.
Fannie
and Freddie, as the two federally-created entities became known, were
blamed for encouraging an era of reckless lending and were bailed out by
the US government at a cost of $187bn.
But efforts to reform them since the crash have been hampered by fears about continued weakness in the housing market.
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