WASHINGTON (AP) — President Barack Obama, seeking to buffer taxpayers from future housing market downturns, will urge Congress this week to back bipartisan efforts to shutter Fannie Mae and Freddie Mac, the mortgage-giants bailed out by the government in 2008.
Obama will also renew his calls for sweeping mortgage refinancing legislation when he travels to Phoenix Tuesday. Arizona's desert capital was the epicenter of the housing crisis that began in 2008, but the market there has rebounded strongly, with home prices up and foreclosures down.
The president's visit to Phoenix marks the latest stop on his summertime economic tour aimed at refocusing his agenda on middle class Americans still struggling to fully recover following the recession. The collapse of the housing market in particular had a dramatic impact on people's lives and the economic viability of communities across the country.
"So many Americans across the country view their own economic and financial circumstances through their homes and whether they own a home, whether their home is underwater, whether they feel like they have equity in their homes," White House spokesman Jay Carney said Monday.
Senior administration officials said Obama would focus in Phoenix on shifting more of the burden for supporting the nation's massive mortgage market to the private sector. A centerpiece of that effort is his support for winding down Fannie Mae and Freddie Mac.
The White House has already lauded efforts to achieve that goal spearheaded by Republican Sen. Bob Corker of Tennessee and Democratic Sen. Mark Warner of Virginia. While Obama will outline his own proposals on Tuesday, his plans are largely in line with the bipartisan Senate overhaul.
Officials said Obama will insist that the government only step in to pay out mortgage guarantees after private capital has been exhausted and that private capital bear the substantial majority of any losses. He will also call for Fannie and Freddie's investment portfolios to be wound down by at least 15 percent per year.
Obama advisers did not outline a specific timeframe for winding down Fannie and Freddie. The Corker-Warner legislation would shutter the operations within five years.
Fannie and Freddie were nationalized during the 2008 financial collapse and bailed out with $187 billion in taxpayer-funded loans. The two enterprises don't directly make loans, but buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors.