White House Weighs 'Bad Bank' Fix for Fannie, Freddie

The White House’s National Economic Council will meet today to discuss a drastic overhaul of beleaguered nationalized mortgage dealers Fannie Mae and Freddie Mac, the Washington Post reports. Among other proposals, officials are contemplating a “good bank, bad bank” split. Fannie and Freddie would dump their troubled loans on a new, government-created company that would work to collect the outstanding balances, giving the mortgage giants a clean slate.

“It should come as no surprise that the administration is thinking through” drastic changes to the companies, a Treasury spokesman said. In an interview yesterday, the top regulator of Fannie and Freddie said the "bad bank" solution was necessary. Officials will also discuss whether to merge the “good banks” into one government agency, or return to a hybrid public/private model. (More Fannie Mae stories.)