Treasury Secretary Timothy Geithner says the Obama administration wants Congress to overhaul Fannie Mae and Freddie Mac within two years to help stabilize the housing financial markets.

But Geithner warned that acting too hastily could destabilize the already fragile housing finance market and bring more harm to economic recovery.

Closing the doors on Fannie Mae and Freddie Mac without consideration for the pace of economic recovery could shock an already fragile housing market, severely constrain mortgage credit for American families, and expose taxpayers to unnecessary losses,” Geithner said in a statement he was to deliver to the Financial Services Committee on Tuesday. Housing is a critical part of our economy and we will proceed with our plan for reform with great care.

Congress continues to debate how to reshape the government’s role in the housing market, with differing opinions from Republicans and Democrats on what should be done and how quickly.

Fannie and Freddie own or guarantee securities backed by about half of all U.S. mortgages.

The Obama administration released a report a few weeks ago that proposed options for gradually reducing government’s role in the conventional mortgage system.

We are committed to a system in which the private market--not American taxpayers--bears the burden for losses, Geithner said.

Source: “Geithner Telling Congress he Wants Bill Overhauling Fannie Mae, Freddie Mac in 2 Years,” Associated Press (Feb. 28, 2011)