The GSEs earned a combined $20.5 billion in theoretical net income under the severely adverse economic scenario of the 2022 stress tests. But those returns would vanish if they had to reserve for deferred tax assets.
The former FHFA director said, given the Federal Reserve’s commitment to fight inflation, home prices could fall by double digits in percentage terms over the next few years.
Conservative economist Douglas Holtz-Eakin said the Federal Reserve’s exit from the MBS market is helping drive up interest rates in the affordable housing space. The remedy, he said, is GSE reform.
During a recent congressional hearing, FHFA Director Sandra Thompson said the agency will conduct a 90-year lookback as well as a forward-looking analysis of the FHLBank system.