The Treasury Department has published the administration’s plan to reform the housing market. The report calls for ultimately “winding down” Fannie Mae and Freddie Mac, but with the recognition that their longtime dominance has effectively crippled the private market for housing loans so the winding down will take time. (I should add that it’s unclear to me whether “winding down” Fannie and Freddie means that the goal is to eliminate them or just to make them substantially smaller.)
The report touches on many other issues related to housing, including consumer protection, the structure of the servicing industry, risk retention requirements for banks (but aren’t we trying to make the banks less risky? See Jonathan Parker’s post on this), the provision of rental housing, etc. The ultimate reforms will probably differ in many respects from the proposal, which is often vague. But at least it is now possible to discuss the future of Fannie and Freddie in a serious way.