Fannie Mae-No Politics (FNMA)

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Watt: Only Congress Can End GSEConservatorship.FHFA Director Melvin L. Watt. WASHINGTON, DC—Hopes that Federal Housing Finance Agency chief Mel Watt could, with just the stroke of a pen, end the conservatorship of Fannie Mae and Freddie Mac, have been roundly dashed. In testimony last week before the Senate Banking Committee, Watt said that "conservatorship is not, cannot, should not be a permanent state, and it is the role of Congress to determine what the future state is."

Doubling down on this position, the US Treasury Department responded to a query by the Wall Street Journal on the subject on Friday. "Comprehensive housing finance reform legislation is the only way to end the conservatorship responsibly and transition to a new system that brings stability back to the housing market while protecting taxpayers," a spokesperson said in an email.

The notion that the FHFA might move forward to end conservatorship has been promoted by Sen. Tim Johnson (D-SD), who brought it up during Watt's testimony on Wednesday.

FHFA, though, is programmed to continue with its mission unless and until Congress acts. Certainly it has made its responsibilities clear in its newly-released FHFA Strategic Plan: Fiscal Years 2015-2019, which discusses the conservatorships. The strategic plan also includes the priorities outlined in the 2014 plan released in May.

The report also touches on directions in which the FHFA is nudging the GSEs, namely the development of a Common Securitization Platform and the development of a single GSE security.

A single security, the FHFA noted, would "reduce the trading value disparities between Fannie Mae and Freddie Mac securities. The different mortgage securities currently issued by the Enterprises are not fungible with one another, and Freddie Mac’s security has historically traded less favorably compared With Fannie Mae’s security."

http://www.globest.com/news/12_994/national/multifamily/Watt-Only-Congress-Can-End-GSE-Conservatorship-352830.html