Fannie and Freddie linked with new securities idea

The Associate Press reports that Edward DeMarco, acting director of the Federal Housing Finance Agency, has put forth a plan to create a new agency to lessen the government's role in the mortgage industry. DeMarco has proposed a new agency, as a combination of Freddie and Fannie, which would be able to sell financial instruments, or act as a restructuring tool for the mortgage market. Fannie and Freddie guarantee about half of all home loans totaling 31 million homes, with $5 billion of exposure. Of the $170 billion given them in aid during 2008, the agencies have paid back $52.3 billion. Initially, the new agency would be jointly owned by Freddie and Fannie.