Rachel Martin reports live from Birmingham with results and reaction to the closely watched Alabama Senate Race.
Arizona State University Expert Talks President Obama's Mortgage Plan
President Barack Obama called for an end to mortgage giants Fannie Mae and Freddie Mac at a Phoenix high school Tuesday afternoon.
President Obama’s plan would reduce the government’s stronghold over the mortgage finance market, but the plan may have other hurdles beyond congressional passage.
Herbert Kaufman is a finance professor in Arizona State University's W.P. Carey School of Business and a former economist with Fannie Mae in Washington. He said that it will take more than moving toward privatization to fix the housing market.
"The housing market is really going to get strong and healthy again when the economy gets strong," Kaufman said. "You can do all kinds of programs, but that has to be supported by a robust economy, and we're still not there."
Kaufman cautions the federal government guarantees about 80 percent of the nation’s home mortgage market, and a transition would be a lengthy effort.
"If you dump all these mortgages that they now control and they securitized into the marketplace all at once, it'll be very damaging to the market," Kaufman said. "So, it'll have to be done in an orderly, liquidating fashion, which could take a very long period of time."
President Obama said there is no program that is going to solve all problems, but that taxpayers should not be left with the costs. He supports a bipartisan Senate measure that would phase out Fannie and Freddie in five years.