If Treasury converts its senior preferred shares to commons and the GSEs go for a public offering, existing shareholders will take a haircut. Valuations on the commons could dip to $1/share for Fannie and $2 for Freddie.

In a plan that began at least as far back as 2016, the FHLBanks actively considered buying one of the government-sponsored enterprises. Even senior staff at Treasury and FHFA were involved.

If a Democrat wins the presidential race, industry analysts expect regulatory changes in the mortgage industry. If Trump is reelected, GSE reform efforts will continue to gather pace.

Asked what levels of capital would be necessary in order to release Fannie and Freddie from conservatorships, Treasury and FHFA said it is “premature” to comment on specific levels.

For allowing FHLB membership, FHFA wants to know what specific financial requirements should be enforced and how existing members would be impacted.

If billionaire Mike Bloomberg starts looking like a front-runner in the 2020 presidential elections, putting out stock offerings on Fannie Mae and Freddie Mac could prove difficult.

Concerned about relaxed appraisal standards for mortgage originations, two senior members of the House Financial Services Committee want the Government Accountability Office to conduct a study.

Fannie Mae reported ”fair value losses” of $2.2 billion for 2019. That’s compared to a $1.1 billion gain in 2018, and a $1.2 billion loss in 2017. Volatility in the company’s income reflects its hedging operations.

Just like previous budgets proposed by President Trump, the 2021 version stands little chance of getting passed by Congress. But it does provide a win-dow into the administration’s priorities.