Fannie, Freddie need rules to avoid ‘Race to the Bottom,’ NHC says

Privatizing Fannie Mae and Freddie Mac risks a return to the kind of perilous mortgages that helped cause the global financial crisis unless regulatory safeguards are kept in place, an affordable housing nonprofit said in a paper on Tuesday. 

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“This is essential to averting the ‘race to the bottom’ that ultimately drove down credit standards during the run-up” to 2008, according to the paper by the National Housing Conference, a copy of which was seen by Bloomberg News. 

Fannie and Freddie have been in quasi-government ownership since Congress established the Federal Housing Finance Agency in 2008 to oversee them after the housing market collapsed. Wall Street investors such as Pershing Square Capital Management’s Bill Ackman have…