Mortgage industry groups continue to put pressure on the Treasury Department and the Federal Housing Finance Agency to revisit the restrictions on the amount of loans Fannie Mae and Freddie Mac can purchase.
The proposed rule would require the GSEs to write living wills that include no government support. However, their PSPA with Treasury includes letters of credit with an outstanding balance of $254 billion.
The co-inventor of the MBS says Fannie and Freddie should be regulated as utilities to improve their affordable housing and racial equity activities. He recommends Treasury use its equity to fund joint venture.
The new PSPA will allow Freddie Mac and Fannie Mae to continue retaining earnings until they reach the regulatory minimum capital — almost $283 billion combined.
Justice Stephen Breyer raised eyebrows by characterizing the government’s net worth sweep of Fannie Mae and Freddie Mac profits as nationalization of the GSEs.
House Financial Services Committee Chair Maxine Waters, D-CA, wants various rules and regulations introduced during Trump’s presidency to be rescinded or replaced.
In testimony before lawmakers, both Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell stressed that time and care is needed to raise capital before the GSEs exit conservatorship.
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