Paulson: GSE risk potential requires new regulator
|
|
|
| Posted
:
Tue, 15 Jul 2008 16:05:06 GMT |
| By
:
Reuters |
| Category
:
US (Business) |
| News Alerts by
Email ( click
here ) |
|
US Business News |
Home
|
|
|
|
WASHINGTON (Reuters) - Housing finance giants Fannie Mae and Freddie Mac have the potential to pose systemic risks to the financial system and need a stronger regulator, U.S. Treasury Secretary Henry Paulson said on Tuesday.Paulson, in prepared testimony before the Senate Banking Committee, urged Congress to pass legislation to reform oversight of the two government-sponsored enterprises, with modifications that provide them temporary government backstops for liquidity and equity capital."We have long maintained that the GSEs have the potential to pose a systemic risk and worked with Congress on legislation to create a GSE regulator with authorities appropriate to the task and on a par with other financial regulators. We must complete this work," Paulson said.He said the proposal announced over the weekend to give the Treasury temporary authority to increase the GSES' credit line and purchase their shares if needed "was not prompted by any sudden deterioration in conditions at Fannie Mae and Freddie Mac."Nonetheless, he said, steps were needed to respond to market developments and boost confidence in the two institutions that serve as the core of U.S. housing finance by providing assurances that they have access to liquidity and capital.Persistent worries about shareholder dilution and the long-term stability of Fannie and Freddie, which provide liquidity to the housing market by buying and securitizing mortgages, have ravaged their stock prices in recent days."Given the difficulty in determining the appropriate size of the (GSE) credit line we are not proposing a particular dollar amount, Paulson said. "Flexibility is the best means of increasing market confidence in the GSEs and also the best means of minimizing taxpayer risk."NO IMMEDIATE FUNDING NEEDSHe stressed, however, that there were no immediate plans by Fannie or Freddie to access the proposed increased Treasury credit line, nor to seek Treasury purchases of its equity."If either of these authorities is used, it would be done so only at Treasury's discretion, under terms and conditions that protect the U.S. taxpayer and are agreed by both Treasury and the GSE," Paulson said.He said he was continuing to encourage the GSES to raise capital and said confidence in the institutions was important to maintaining financial system and market stability."Fannie and Freddie play a central role in our housing finance system and must continue to do so in their current form as shareholder owned companies," he said.(Reporting by David Lawder, Editing by Dan Grebler)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
