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.
The FHFA in September increased the cap on Fannie’s and Freddie’s multifamily lending to $100 billion each through the end of 2020, with at least 37.5% of their business earmarked for affordable housing.
Many analysts anticipated the implementation of CECL would balloon the loan loss reserves of the GSEs. Last week, though, both enterprises downplayed CECL’s potential impact on first-quarter earnings.
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.
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.