The Obama administration called for "fundamental change" at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage giants and housing policy that affects millions of Americans and billions in investment.
U.S. Treasury Secretary Timothy Geithner on Tuesday raised basic questions about the government's long-standing role in subsidizing the $10.7 trillion housing market and supporting the historic "American dream" of home ownership.
Critically for both homebuyers and investors, he backed some form of government guarantee for mortgages. Geithner said a key question was whether the private sector could provide insurance or guarantees as part of a new home financing regime with enough safeguards to avoid another mortgage meltdown.
"It is not tenable to leave in place the system we have today," Geithner said.