Harvard's Don Layton on creating more competition for Fannie and Freddie: “I have not encountered any knowledgeable people who think it could happen quickly."
Back in early June, the share price of Fannie/Freddie common was rallying, reaching $3.16 (for the former) and $3.07 for the latter. If you had bought in at those prices, today you’d be looking at losses of 23.1% and 24.7%, respectively.
In a new opinion piece, former Freddie CEO Don Layton argues against having multiple MBS guarantors, a position he’s taken in the past. Layton, who now bides his time at the Harvard Joint Center for Housing Studies, argues the barriers to entering the secondary guarantee business are high, “possibly even insurmountable.”
Fannie and Freddie will report second quarter earnings later this month. It's a safe bet that lower rates will translate into some large hedging marks...
The next step might be to create a limited liability regulated entity (LLRE) which would succeed the GSE. After that, the LLRE (once capital is raised) becomes a new company and the charter is sold to new owners. From what we understand, the FHFA has the legal power to sell the charter...
The robust second quarter brought year-to-date agency MBS issuance to $562.02 billion, just 1.3% below the level reached in the first six months of last year.
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