Page 30 - July-August 2018 GSE Report Flip Book

FANNIE MAE AND FREDDIE MAC JJUALN. U- ARUYG. 22001188
FANNIE MAE AND FREDDIE MAC The GSEs’ decade in conservatorship
IMF News’ Paul Muolo wrote:
September 6 will mark the 10th anniversary of the federal takeover of Fannie Mae and Freddie Mac by the Treasury Department and the Federal Housing Finance Agency. Needless to say, op-eds and opinion pieces are already in the works by the usual suspects who will decry (take your pick) Congress’ inability to find a solution, the huge amount of profits the two continue to churn out, and how the common and junior preferred shareholders have been hosed by Uncle Sam. (Oh the inhumanity of it all!)...
From Bob Broeksmit, the new CEO of the Mortgage Bankers Association: “Ten years in conservatorship is far too long. We need policymakers to lock in the changes that FHFA has instituted, which ensure a level playing field and fair competition for lenders. We also need policymakers to complete additional reforms to ensure liquidity for the single-family and multifamily markets, while protecting taxpayers. Only when reform is complete will the private market return as a reliable presence, which will benefit borrowers, taxpayers, and the housing market as a whole...”
From Stuart McFarland, a former Fannie executive (pre-crisis): “Housing is elemental to our economy, and the disabilities of its financing system are un- reformable. Investors must be able to credibly grade what they may want to trade. When we confront the market information problem the GSE question may answer itself....”
Meanwhile, a dozen or so mortgage, housing and consumer groups are putting the final touches on a new letter to Treasury Secretary Steven Mnuchin, asking that the department not make any radical administrative changes to the operations of Fannie and Freddie, according to industry stakeholders familiar with the matter. The immediate and chief concern is that FHFA Director Mel Watt could depart prematurely, throwing the balance of power over to the White House, which would then move to pick a new FHFA director. The industry fears the administration’s pick, working in tandem with Treasury, would then move to cut GSE loan limits as a test to see if the private sector would pick up that business and at what price. (IMF News, Paul Muolo, 08/31/18)
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