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Mel Watt: Private Sector Not Ready for Freddie, Fannie to Leave Housing Market

money-graphMel Watt, director of the Federal Housing Finance Agency, said Sunday that Fannie Mae and Freddie Mac should not leave the housing market until private firms are ready to step into the two organizations’ roles, Reuters reported Sunday.

Watt told C-SPAN in a “Newsmakers” program interview that the government-backed mortgage companies need to continue their operations to ensure the sector’s liquidity, according to the report by Krista Hughes and Tim Ahmann.

Lawmakers have proposed to wind down Freddie Mac and Fannie Mae as part of a larger housing finance reform.

“It’s not that I’m opposed to it and we will certainly allow it to happen,” Watt told the Sunday TV show.

“But if the private sector is not ready to step into the space, and you shrink what Fannie and Freddie are doing, you do damage to housing finance in this country and that does damage to the economy and that does damage to the possibility of affordable housing and home ownership,” he added, according to Reuters.

Reuters reports that Watt is willing to discuss any policy change regarding the federal government’s bailout of both mortgage firms during the 2008 financial crisis.

Fannie Mae and Freddie Mac will have returned $213.1 billion in taxpayer money by the end of June, according to the article.

“I don’t think that’s a bottomless pit or a bucket that can never be drained … but right now it’s not creating problems for them to operate,” Watt added.

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