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.
The move suggests the GSEs’ public offerings — estimated by some to be worth as much as $200 billion — may take place in the midst of the worst economic crisis since the Great Depression.
With combined assets worth about $6.1 trillion, Fannie Mae and Freddie Mac will need to set aside roughly $250 billion in leveraged capital in order to comply with the new rule.