Fannie Mae-No Politics (FNMA)

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IMF news: Academic Weighs in on GSEs' Future: Obama Should go with an ‘Administrative’ Solution

The Federal Housing Finance Agency and the Obama administration could secure their legacies during the next two years by releasing Fannie Mae and Freddie Mac from conservatorship as two stable and smaller government-sponsored enterprises, say experts.

Speaking during a recent conference call sponsored by GSE shareholder rights group Investors Unite, Clifford Rossi – founder and principal at Chesapeake Risk Advisors – reiterated his call for an administrative solution that would recapitalize the GSEs and bring them out of conservatorship under strict conditions.

“Knowing that it’s going to be an uphill battle to get any sort of resolution from Congress, it could be a legacy play for the administration to do something that would be a marquee, once-and-for-all solution to get us back on track,” explained Rossi, who is also a professor at the University of Maryland. “From a political angle, I suppose it would be worthwhile to consider.”

This solution is already possible within the Housing and Economic Recovery Act of 2008, which grants the FHFA authority to bring the GSEs out of conservatorship, Rossi notes in a recent white paper commissioned by Investors Unite. For more on the story, see Inside Mortgage Finance.