Fannie Mae and Freddie Mac, the government-managed mortgage giants put into conservatorship during the height of the financial crisis, represent “unfinished” business, according to Federal Reserve Chairman Jerome Powell.
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“I think it is really important for the longer run that we get the housing finance system off the federal government’s balance sheet,” Powell said during congressional testimony following the release of the central bank’s semi-annual Monetary Policy Report on the U.S. economy. “I think it is very important for the economy longer term.”
Shares of Fannie Mae slipped Tuesday immediately following the remarks but closed higher. Freddie Mac dropped more than 3%.
The federal government bailed out Fannie Mae and Freddie Mac in 2008, taking control of the mortgage finance agencies during the housing crisis.
Earlier this year, Fannie Mae said the agency that regulates it, the Federal Housing Finance Agency, would seek a taxpayer infusion of $3.7 billion after the company reported a net loss of $6.5 billion in the fourth quarter. It would mark the first such infusion of cash in six years.
U.S. Treasury Secretary Steven Mnuchin has also backed the effort to implement changes to the government-sponsored enterprises (GSEs).
“I am determined that we have a fix to the GSEs and that we don’t leave them in conservatorship for the rest of time,” Mnuchin told FOX Business’ Maria Bartiromo in an interview in April.