Fannie Mae has 7200 employees, revenue of $114 billion and
assets of $3.4 trillion in mortgage loans.
Freddie Mac has 6185 employees, revenue of $73.5 billion
and assets of $2.2 trillion in mortgages.
These two mortgage companies have been in conservatorship
by the US federal government since 2008.
Trump admin considers
sidestepping Congress to overhaul Fannie and Freddie, by Kevin Sun, 2/14/19,
One option is to recapitalize the entities before
privatizing them
The Trump administration may bypass
Congress in its effort to privatize Fannie Mae and Freddie Mac, which have been
in government “conservatorship” for a decade.
Treasury secretary Steven Mnuchin, who
previously sought support from Democrats in Congress to privatize the mortgage
giants, is now working on a set of proposals to do so unilaterally, sources
told the Financial Times.
“They want bipartisan support, but they
know that is going to be difficult, especially with so many Democrats running
for president,” one source said. “But there are plenty of things they can do
without Congress giving its support.”
Efforts to overhaul the country’s two
largest mortgage guarantors have been in limbo for years, as lawmakers argue
over how to remove them from government control while ensuring that they
underwrite loans for low-income households, all while protecting American
taxpayers.
One way of bypassing Congress, which
would require the backing of the Federal Housing Finance Agency, would be
to simply recapitalize the two institutions and allow
them to enter the private market as-is. The administration’s choice to lead the
FHFA, Mark Calabria, will testify in front of Congress on Thursday.
Since 2012, a policy known as the “net
worth sweep” has required that Fannie and Freddie return all their profits to the Treasury. Investors argue that
ending this policy would give the entities sufficient capital buffers to
weather a major financial storm.
Another option would be not to privatize
the entities at all, but to recapitalize them under government control and
shrink their scope, a move that would likely anger shareholders banking on big
returns from privatization.
Many observers believe this
administration is no more likely to succeed in privatizing the mortgage giants
than lawmakers have been over the past decade.
“Any administrative effort to remove
Fannie Mae and Freddie Mac from conservatorship without legislation falls short
on a fundamental goal of housing finance reform,” said Ed DeMarco, president of
the Housing Policy Council and former head of the FHFA.
Norb Leahy, Dunwoody
GA Tea Party Leader
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