WASHINGTON ( TheStreet) -- Nearly two years after Fannie Mae ( FNM) and Freddie Mac ( FRE) were put into conservatorship, the Treasury Department is finally starting to consider what to do about housing finance. At a panel discussion Tuesday, Bill Gross, Pimco chief investment officer; Lewis Ranieri, chairman of Ranieri and Co., and other financial and political leaders debated the future of the mortgage market, including that of the crippled government-sponsored enterprises Fannie and Freddie.
Treasury Secretary Timothy Geithner
" This is about more than designing an elegant funeral for Fannie and Freddie," Treasury Secretary Timothy Geithner said in his opening remarks. "It requires a broader reassessment of how much support the government should provide for housing finance." Geithner argued that the government will have a "planned wind-down of GSEs' portfolios" but that a there's "strong case to be made" for continued guarantees. Deciding the fate of the GSEs will not be an easy task. Some argue that the U.S. has provided too much support for Fannie and Freddie and propose that the government get completely out of the business of housing finance. However, others suggest the country currently provides too-little support to promote housing affordability for lower-income Americans and are proposing reforms that would leave the current system largely in place. It's safe to say there's no clear consensus yet on how best to design a new system. -- Written by Lauren Tara LaCapra in Washington, D.C..