Washington (AFP)
Eleven years after the bursting real estate bubble caused by high-risk home loans, Washington wants to privatize the para-public groups Fannie Mae and Freddie Mac, who are the keystone of financing the real estate market in the United States.
On Tuesday, US Treasury Secretary Steven Mnuchin presents his plan to reform the US mortgage market financing system before a Senate committee.
Since the "subprime" crisis and their rescue by the federal government, the two giants of the mortgage market, Fannie Mae and Freddie Mac, have been nationalized at a high price.
The state had to pay close to 190 billion dollars in 2008 to avoid the bankruptcy of these organisms drowned under the subprime loans insolvent.
These institutions, with their complex mechanics and little known to the general public, do not make loans but they buy loans to banks, securitize them and resell them to investors as mortgage bonds that they guarantee implicitly.
This system has made it possible to finance ultra-long-term loans such as 30-year fixed rate mortgages, a rarity elsewhere than in the United States.
Appeared in the 60s, this mortgage is associated with the "American dream". At the peak of the housing bubble, the rate of homeowners in the United States has reached 70% before collapsing with the recession and millions of foreclosures.
- Recapitalization -
In a report released last week, the Treasury laid the groundwork for a long-promised reform of these agencies, which the Donald Trump government made a priority.
Especially since Fannie Mae and Freddie Mac are listed hybrid institutions, investors have consistently opposed their nationalization, which went hand in hand with the payment of all their dividends in the caisses. of State.
Since the real estate market has recovered, Fannie Mae and Freddie Mac - whose names are just the phonetic adaptation of their acronyms like the Federal National Mortgage Association (FNMA) for Fannie Mae-- have found juicy profits that have directly taken the path of the Treasury.
These entities have donated some $ 300 billion in profits to the Treasury, largely offsetting the cost of their rescue.
The reform plan promoted by Steven Mnuchin includes about fifty proposals for both legislative and regulatory measures and aims first to recapitalize these institutions by letting them store their profits to build this capital.
This recapitalization should provide a cushion of capital able to absorb some of the losses in the event of a new property catastrophe.
The Treasury no longer wants an implicit general guarantee of the state - which led to the bailout - but intends to establish an "explicit guarantee and already financed" which will be exercised on certain mortgage bonds.
Mnuchin hoped Monday to get congressional support to speed up reform "within three to six months". But if Congress does not move forward, the administration will take the lead, he promised.
"An efficient and productive real estate financing system will also make an important contribution to the continuation of economic growth under this government," said the Treasury Secretary, a former banker trained at Goldman Sachs, who bought one of the first big banks bankrupt (IndyMac renamed OneWest) because of the "subprime".
On their own, Fannie Mae and Freddie Mac guarantee nearly half the volume of real estate loans in the United States, nearly $ 5,000 billion, a huge bond market after that of treasury bills.
The publication of the reform project comes just as shareholders of the two organizations, who for years had been against the payment of dividends to the state, have obtained satisfaction on appeal.
© 2019 AFP