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Obama To GOP: Surprise! I'm Not A "Socialist"

In an Arizona speech about mortgage reform, the president proposed "winding down" Fannie and Freddie and says "private capital should take a bigger role in the mortgage market." He joked that the idea will come as a shock to some of his Republican opponents.

Posted on August 6, 2013, at 4:28 p.m. ET

WASHINGTON — The president took aim at Republicans still convinced he's a socialist in a speech about homeownership in Phoenix, AZ Tuesday.

The speech was the latest in Obama's series of economic reform speeches meant to tout the president's economic accomplishments, call for a new focus on growing the middle class and attack Republicans for their opposition to his plans.

The hallmark of the Arizona speech was Obama's proposal to slowly eliminate Fannie Mae and Freddie Mac, the federally-guaranteed mortgage corporations, and put loan guarantees in the hands of private investors. Similar plans have bipartisan support in Congress, but Obama said his backing of the idea could raise some eyebrows on Capitol Hill.

"Private capital should take a bigger role in the mortgage market," he said in his prepared remarks. "I know that must sound confusing to the folks who call me a raging socialist every day."

When he delivered the speech, Obama softened the line a bit, dropping the "raging" and saying, "I know that sounds confusing to the folks who call me a socialist. I think I saw some posters out there on the way in."

The context and transcript, from Obama's prepared remarks:

That's the second thing I'm here to talk about today: laying a rock-solid foundation to make sure the kind of crisis we just went through never happens again.

That begins with winding down the companies known as Fannie Mae and Freddie Mac. For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was "heads we win, tails you lose." And it was wrong.

The good news is that there's a bipartisan group of Senators working to end Fannie and Freddie as we know them. I support these kinds of efforts, and today I want to lay out four core principles for what I believe this reform should look like.

First, private capital should take a bigger role in the mortgage market. I know that must sound confusing to the folks who call me a socialist every day. But just like the health care law that set clear rules for insurance companies to protect consumers and make it more affordable for millions to buy coverage on the private market, I believe that while our housing system must have a limited government role, private lending should be the backbone of the housing market, including community-based lenders who view their borrowers not as a number, but as a neighbor.

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