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Current US Housing Finance System 'Unsustainable': Fed's Powell

According to the Federal Reserve Governor, Jerome Powell, the U.S. housing finance system is putting taxpayers at risk in a market dominated by government-backed agencies and therefore, further reforms are required for "unsustainable" situation. He further added that a decade after doubts regarding the creditworthiness of mortgage-backed securities helped trigger the worst financial crisis since the Great Depression, systemic risk remains, given the concentration of mortgages in Fannie Mae and Freddie Mac.

Key lawmakers in the House and Senate have started examining proposals to overhaul housing finance, and also the issue has been indicated as a top priority by U.S. Treasury Secretary Steven Mnuchin . Although the Fed does not have direct role in regulating mortgage finance, but as supervisor of banking system, it surely is interested in the stability of the industry.

Fed mentioned that some principles behind post-crisis banking reforms could be applied to mortgage finance to put more private capital at risk and to ensure that no institution, including the government-sponsored enterprises, is too big to fail.

News Characteristics

Date : Jul 06, 2017
Region : North America
Industry : Mortgage Companies
Function : Regulation and Compliance
Sub-Function : Regulatory changes