Obama outlines plans to dismantle Fannie Mae and Freddie Mac

President cautioned that the 'era of expecting a bailout' was over in a speech in Phoenix – the epicentre of the housing bubble

Dan Roberts in Washington
theguardian.com, Tuesday 6 August 2013 17.35 EDT

Efforts to unravel housing subsidies that fuelled the financial crash reached a milestone on Tuesday as Barack Obama said the national housing recovery was now strong enough to begin dismantling federal mortgage giants Fannie Mae and Freddie Mac.

In a speech in Phoenix, the epicentre of the housing bubble, the president outlined a series of steps he said could limit the negative impact on home buyers of scrapping these billions of dollars in loan guarantees but insisted there was no alternative if future housing bubbles were to be avoided.

Fannie and Freddie, as the two federally-created entities became known, were blamed for encouraging an era of reckless lending and were bailed out by the US government at a cost of $187bn.