The mortgage industry has resigned itself to no administrative end to the Fannie and Freddie conservatorships. It’s still unclear what happens to the GSEs’ capital requirements.
Biden’s FHFA nominee Sandra Thompson has made it clear that the agency can’t end the conservatorships without help from the Departments of Treasury and Justice and, most importantly, Congress itself.
The proposed capital planning rule could set the stage for post-conservatorship regulation of the GSEs, but it still relies on capital requirements that the enterprises may not meet for at least a decade.
Treasury Secretary Steven Mnuchin said he is “not going to do anything that jeopardizes taxpayers.” But his real concerns? How to adequately capitalize Fannie and Freddie first.
Treasury Secretary Steven Mnuchin suggested in a Senate hearing that Fannie and Freddie may not have enough capital to exit conservatorship before Trump leaves office.
Andrew Bon Salle, who runs Fannie’s single-family business, will be leaving later this year. Also, several other key GSE executives are planning departures, according to former and current staff.
The trade group reiterated that Fannie and Freddie should not be permitted to exit conservatorship until further systematic, wholesale and long-term reforms are made permanent.