THE REAL DANGER OF RELEASING GSES FROM CONSERVATORSHIP
Not too long ago, the Treasury decided that it was time to allow the two GSEs to retain most of their earnings in order to rebuild their capital reserves. That in addition to the administrative actions that were aimed at making the GSEs
private entities, meaning recapitalization and an end to conservatorship. This consequently led to a legislative action to resolve the GSE’s longstanding conflict of their identity and status. But, is this the right time? Its been ten years since the last chaos in the housing industry. And in that time, we have lost memory of what happened. It has been ten quiet years and you know what happens in the good times, we forget! We forget about the mistakes that we made in the past that made us regretful and we let our guard down. Our forgetfulness is a costly risk! When Mark Calabria entered office as the new director of the Federal Housing Finance Agency (FHFA), he had four main agendas;
americanbanker.com
F
annie Mae and Freddie Mac are governmentsponsored enterprises (GSEs) and since their inception, they have played a significant role in the country’s housing finance industry. After the chaos that was in 2008-9, the Federal Housing Finance Agency took over the management of the GSEs’ assets and their business conceptconservatorship. Ever since these two entities have relied upon the government for their financial support. In addition, most of their earnings in turn have been to the Treasury that has a major stake in these two GSEs.
