SOURCE: National Cooperative Business Association

National Cooperative Business Association

December 13, 2010 09:00 ET

Option to Restructure Fannie and Freddie as Cooperatives Gains Momentum, Says NCBA

WASHINGTON, DC--(Marketwire - December 13, 2010) -  The National Cooperative Business Association (NCBA) is pleased to note the growing consensus that the cooperative business model offers a market-responsive option for restructuring Fannie Mae and Freddie Mac. A recent Congressional Research Service Report to Congress, which suggests that the government sponsored enterprises become Federal Home Loan Banks, is only the latest addition. Co-ops are democratic institutions, owned by their members and operated to serve member need. Converting Fannie Mae and Freddie Mac into cooperative enterprises offers a way to reduce the risk to the American public while providing an important source of liquidity for housing finance. 

"As Congress organizes for a new year, it must face the issue of restructuring these entities. The cooperative business model should be part of their discussions," said NCBA President and CEO Paul Hazen. "Precedents exist -- both the Federal Home Loan Bank System and the Farm Credit System are government-sponsored enterprises that are cooperatives," he continued.

The CRS Report, released Nov. 18, 2010, joins a line of documents that include the cooperative business model as an option for restructuring Freddie Mac and Fannie Mae. In August the Federal Reserve Bank of New York released a staff report examining the cooperative model and its advantages in addressing incentive problems within the current enterprises. A Nov. 15 report from the Government Accountability Office suggested that the cooperative model could encourage safer mortgage underwriting practices and promote standards. A September 2009 CRS Report included the option of making Fannie Mae and Freddie Mac part of the FHLBank System. 

Around the world and in the United States, cooperative banking offers a sound option for consumers and lenders. Over 29,000 cooperatives operate in the United States in all facets of our economy, serving farmers, small businesses, healthcare, energy and childcare among others. 

"The cooperative business model should be a part of the debate about the fate of Fannie Mae and Freddie Mac. NCBA stands ready to offer its expertise to Congress as it considers this issue," said Hazen.

ABOUT NCBA
Headquartered in Washington, DC the National Cooperative Business Association creates cooperative connections across all sectors of the nation's more than 29,000 cooperative businesses, including agriculture, food distribution and retailing, childcare, credit unions, housing, healthcare, purchasing, worker, energy, and telecommunications cooperatives. In addition, NCBA's CLUSA International Program has helped develop cooperatives and other sustainable businesses in over 50 countries since 1953. CLUSA currently runs 23 projects in 11 countries. To learn more about NCBA, please visit www.ncba.coop.

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