Geithner testifies on housing reform, uses damning language

Treasury Secretary Timothy Geithner testified today at the House Financial Services Committee, stating not only that mortgages will most likely be “modestly higher” after the national housing finance system is reformed but that it will take several years to complete.

The Obama administration announced last month that they will be shutting down Fannie Mae and Freddie Mac (who currently back 90% of all American mortgages) to reform the system and Geithner urged lawmakers to begin the effort immediately to avoid stunting the housing sector.

Geithner called upon Republicans who want to reduce Uncle Sam’s role in housing finance (and make lending more privatized) to act swiftly. “You can’t delay indefinitely on legislation defining an ultimate solution. If you do nothing… in many cases you would recreate Fannie and Freddie.”

It will be a long road however as any reform passed by the Republican-controlled House will next head up to the Democratic-controlled Senate which means years of debate despite Geithner’s warning for decisive action by lawmakers.

Geithner’s final warning was that if the House puts forth a proposal to extend the life of Fannie or Freddie, “we will resist.”