Adobe Stock

As Congress mulls another round of housing reform, Sen. Heidi Heitkamp (D-North Dakota) during a Senate Banking Committee hearing, asked Fed Vice Chairman for Supervision Randal Quarles whether a government guarantee was “essential” for “retaining” the 30-year mortgage instruments. Quarles replied: “My belief today is probably not,” according to MarketWatch staffer Greg Robb.

Heitkamp sees things differently. “There are a number of people in smaller or mid-sized institutions who believe it would be difficult to take a 30-year interest-rate risk without some kind of assurance they could offset that risk,” Heitkamp said.

Congress must decide whether to keep Fannie Mae and Freddie Mac under government control (as it has done since the financial crisis in 2008).

Leaving the GSEs in government control would just create uncertainty that would ultimately harm the economy, Quarles said.

Housing finance should be “as private-sector driven as possible,” he said.

Read More