(Adds comments on political context, goals for reform)
WASHINGTON, July 6 (Reuters) - The U.S. housing finance system continues to put taxpayers at risk in a market dominated by government-backed agencies, Federal Reserve Governor Jerome Powell said on Thursday, calling for further reform of an "unsustainable" situation.
A decade after doubts about the creditworthiness of mortgage-backed securities helped trigger the worst financial crisis since the Great Depression, systemic risk remains given the concentration of mortgages in Fannie Mae and Freddie Mac, he said.
"We're almost at a now-or-never moment," Powell told a conference in Washington, arguing that the window for political action on an overhaul of housing finance may not stay open for long.
Key lawmakers in the House and Senate have started to examine proposals to overhaul housing finance, and U.S. Treasury Secretary Steven Mnuchin has also indicated the issue a top priority. Policymakers have struggled for years to craft legislation to significantly reform Fannie and Freddie.
The federal government bailed out Fannie and Freddie in 2008 after they took massive losses on bad mortgages. They have been in government conservatorship ever since and most mortgages are still issued with the backing of government-sponsored enterprises.
U.S. housing prices may have recovered since the crisis, with credit flowing under tighter underwriting standards that have made the system somewhat safer, Powell said in remarks at the American Enterprise Institute, but while "the status quo may feel comfortable today ... it is also unsustainable."
The Fed has no direct role in regulating mortgage finance, but as overseer of the banking system it does have an interest in the stability of the industry, Powell said.
Some principles behind post-crisis banking reforms could be applied to mortgage finance, he said, to put more private capital at risk and ensure that no institution, including the government-sponsored enterprises, is too big to fail.
While there may be a role for government to play in housing finance, that role should be designed to make future taxpayer bailouts unlikely, Powell said.
"We should promote greater competition in this market. The economics of securitization do not require a duopoly," Powell said. "We ought to do whatever we can to make the possibility of future housing bailouts as remote as possible." (Reporting by Howard Schneider; Editing by Meredith Mazzilli)