Fannie Mae-No Politics (FNMA)

[chrisduo]

From politico.com

2. Fannie and Freddie

Mnuchin wants to privatize Fannie Mae and Freddie Mac, the mortgage giants the government put into conservatorship during the financial crisis and that currently remain in limbo. But he will not be able to privatize the companies outright—at least, not just yet.

Legislation passed in 2015 banned the federal government from ending the conservatorship without approval from Congress through 2017. After that year, he may have more leeway to make changes to the mortgage giants. Conservatives specifically want him to end the so-called profit sweeps under which Fannie and Freddie send their profits each quarter to the Treasury. It’s been a lucrative agreement for the federal government in recent years, but it prevented the mortgage giants from building up any capital, said James Glassman, a former undersecretary of state. He argued that Mnuchin should end the sweeps and allow Fannie and Freddie to be recapitalized. “That would make things better for taxpayers,” he said.

However, that won’t be entirely up to Mnuchin, as the conservator—the Federal Housing Finance Agency—would also have to agree to any deal. “I remember during my time at Treasury unsuccessfully arguing for FHFA to adopt certain policies,” said Klein. “It was frustrating that Treasury owned 80 percent of Fannie and Freddie but couldn’t dictate business decisions.” The term of the current head of the FHFA, Mel Watt, doesn’t end until January, 2019. So unless Watt leaves early, Trump won’t be able to install a favored person at the agency for a few years.