–Treasury Secretary Says Admin Assessing ‘Broader Future of GSEs’
–Housing Finance Fix To Occur In Next ‘Stage’ of Reform

By John Shaw

WASHINGTON (MNI) – Treasury Secretary Tim Geithner said Thursday
the Obama administration continues to encourage China to “shift” to an
economic policy that is more focused on domestic consumption, less
reliant on exports, and open to currency reforms.

In response to a question at a Senate Appropriations subcommittee
hearing, Geithner said the administration wants China to “renew the
process of reforming their exchange rate so we allow the market to play
a greater role in determining the level of that exchange rate.”

The Treasury secretary was asked a number of questions about when
the administration will propose comprehensive legislation to overhaul
Fannie Mae and Freddie Mac.

Geithner said fundamental changes are needed in the entire area of
housing finance, adding that this area is “enormously complex.”

“There is a lot of models to look at,” Geithner said.

He said the administration is “absolutely” committed to Fannie and
Freddie reform, but believed it was better to do financial reform “in
stages.”

Geithner said the sweeping financial reform legislation now before
the Senate should be approved this year.

The administration is now “exploring a range of reforms” for Fannie
and Freddie that it will propose and push next year, Geithner said,
adding that it is critical to consider the “broader future of the GSEs.”

In his prepared testimony, Geithner said the administration is
continuing efforts to help homeowners facing foreclosure, but has been
disappointed with the efforts of servicers to help.

“I want to be clear that we do not believe servicers are doing
enough to help homeowners — not doing enough to help them navigate the
difficult and often frightening process of avoiding foreclosure,”
Geithner said.

Treasury is “concerned by the wide variation in performance” of
servicers and “the countless frustrated phone calls” from borrowers
complaining of foreclosures on potentially eligible homeowners, steering
borrowers away from the government program and into the bank’s own
modification program, and banks losing documentation, or claiming to.

“None of this is acceptable. We are committed to making sure that
servicers hold up their end of the bargain,” Geithner said.

Treasury will conduct “targeted, in-depth compliance reviews,” soon
will “publish much more detailed data on the performance of servicers to
hold them accountable to the public.”

** Market News International Washington Bureau: (202) 371-2121 **

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