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.

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.

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.

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.

The agency has picked Houlihan Lokey Capital to help it identify any financial, regulatory or market risks in its path to take Fannie Mae and Freddie Mac out of conservatorship.

Since the launch of the single security, investors have increasingly turned to the use of specified pools rather than the TBA market, said Bob Ryan, a former FHFA official and one of the architects of the UMBS.

FHFA Director Mark Calabria walked back the idea of using a consent decree as part of the agency’s plan to recap and release Fannie and Freddie from conservatorship.

Analysts ponder whether the administration is committed to making key reforms to the GSEs in the midst of an election year.

Senate Banking Committee members are seeking more information on the administration’s plan to release the GSEs from conservatorship.