Fannie Mae, Freddie Mac should be replaced, says Michigan Congressman

Congressman Gary Peters says Fannie Mae and Freddie Mac must go.  But he says they have to be replaced with something else.

The two quasi-private groups provide a federal guarantee for home mortgages.

Taxpayers had to bail out Fannie and Freddie after the housing sector meltdown.

Some people in Congress don’t want to replace Fannie and Freddie with anything, and just let the free market take over.

But Peters says without a federal guarantee, banks would stop offering 30-year mortgages.

"With the elimination of the 30 year mortgage, you’d also eliminate the ability of many people to pursue the American dream and own their own home," he says.

Peters proposes replacing Fannie and Freddie with private associations.        The  associations would be backed by a privately-financed system similar to the F-D-I-C, which guarantees bank deposits.