Where is Obama's Plan for Fannie and Freddie?
To translate that for the rest of you, Frank's committee was going to have a serious, public talk about the future of Fannie Mae and Freddie Mac. And it had invited two very special guests: Treasury Secretary Tim Geithner and U.S. Department of Housing and Urban Development Secretary Shaun Donovan.
So I was disappointed, but not surprised, to get an email yesterday announcing that the hearing had been "postponed to a date and time to be announced later." Yet again, the Obama administration has wiggled out of an obligation to tell the American people exactly what it envisions the home finance system of the future will actually look like.This game as been going on now for more than a year. Last February, in response to the financial crisis, the Obama administration came out with a fat blueprint for reform, and it made a promise:
Great, right? But then the 2011 budget plan came out a month ago, and here's all it said:Treasury and the Department of Housing and Urban Development, in consultation with other government agencies, will engage in a wide-ranging initiative to develop recommendations on the future of Fannie Mae and Freddie Mac, and the Federal Home Loan Bank system. We need to maintain the continued stability and strength of the GSEs [Fannie, Freddie, Ginnie] during these difficult financial times. We will report to the Congress and the American public at the time of the President's 2011 Budget release.
Some report. Knowing what role the government is going to play in steering the mortgage markets - well, that's pretty central to the nation's financial stability, not to mention whether the real estate market will come roaring back or continue to limp along. It was probably too much to hope that a month after that non-report, that Geithner and Donovan would be cleared to make any promises to Congress."The administration continues to monitor the situation of the GSEs closely and will continue to provide updates on considerations for longer-term reform of Fannie Mae and Freddie Mac as appropriate."
I understand there's a lot at stake here. But why is the Obama administration holding back? What are they waiting for? Contrast today's situation with the Reagan administration, which got us into this mess in the first place. In his first year in office, Reagan called together a President's Commission on Housing, and a year after that – the same point in Reagan's first term that Obama is in now – it delivered a 300-page agenda detailing a revolution in how mortgages get made. The plan: let Wall Street package and sell mortgage-backed securities. Congress got on board. And, well, we all know how that worked out.
Let's give Obama's team the benefit of the doubt: Maybe it's showing leadership behind the scenes, persuading the banking and real estate industries to buy into its own vision, whatever it may be. But really, does the administration think so little of the American public that it fears giving them an inkling of what the government would like to see happen? Is it really going to spook the markets into a free-fall?
We know Republican attack dogs are already sinking their teeth into financial reform, calling it a big fat bailout. That's a lie, in service of a larger cause: They're determined to kill hope of a positive government role in the mortgage markets, much as they've blocked health care reform. What the administration needs in response is strong public support for continuing the American dream of affordable, widely available and non-toxic home mortgages.
But instead all this secrecy has had the opposite effect. It's fostered a deepening suspicion among the American public about who the president is really working for - the American people or the banking and real estate industries. And that confusion is paving the way for the opposition's message to go viral, and win the war.