dhollier@imfpubs.com

The Federal Housing Finance Agency last week quietly hired the white shoe law firm Milbank to help develop a legal “roadmap” for Fannie Mae and Freddie Mac to exit conservatorship.

The $13 million contract, which follows the agency’s February selection of Houlihan Lokey as its capital market financial advisor, suggests the FHFA remains committed to public offerings for the two government-sponsored enterprises, despite the turmoil created in the capital markets by the coronavirus crisis.

However, the FHFA did not formally announce any details of the Milbank hire. The only sign the firm had won the contract came when the agency’s request for proposals closed last week and Milbank was listed as the awardee. Nevertheless, the statement of work in the RFP details the types of services Milbank will provide.

The firm’s first task will be to identify and assess the legal options for recapitalizing Fannie and Freddie. That includes advising the agency on “the structuring, pricing, timing and marketing of any capital raise or other transaction…”

Milbank also will provide legal advice as the agency negotiates any amendments to the GSEs’ preferred stock purchase agreements with the Department of Treasury. In addition, the firm will help identify any legal issues that may pertain to the Safety and Soundness Act or the congressional charters of Fannie and Freddie.