WASHINGTON (3/24/10)--U.S. Treasury Secretary Tim Geithner on Tuesday called for the government to “begin the process of fundamental reassessment and reform” of Fannie Mae and Freddie Mac. “A broad reform process of the housing finance system must be undertaken to achieve comprehensive and effective reform that delivers a more stable housing market with stronger regulation, more effective consumer protections and a clearer role of government with less risk borne by the American taxpayer,” Geithner added during prepared testimony delivered before the House Financial Services Committee. The Obama Administration will “develop a comprehensive reform proposal” for the roles of Governmental Sponsored Entities (GSEs) Freddie Mac and Fannie Mae “through public consultation with a wide variety of constituents, market participants, academic experts, and consumer and community organizations,” and the GSEs “will not exist in the same form as they did in the past.” The Treasury and the U.S. Department of Housing and Urban Development (HUD) on April 15 will submit their reform proposals for public comment, Geithner said, adding that the administration would then look to “work closely with the Congress, on a bipartisan basis, prior to finalizing a comprehensive reform plan.” In executing these reforms, the administration will look to align incentives, avoid allowing privatized gains to be funded by public losses, strengthen regulation, and diversify investor base and sources of funding. However, the administration will continue to support the availability of affordable single- and multiple-family real estate options. Some legislators at the hearing indicated that they would support including GSE-related reforms as part of regulatory restructuring legislation, and republicans on the committee said that the government should create an exit strategy from ownership of the GSEs. However, Geithner said that GSE reform can wait and must be done in context of overall housing finance reform. To read Geithner’s full testimony, use the resource link.