From Jtimothyhoward board comments
Tim,
Do you think Mnuchin had a lot of say in this budget? I ask because how does one square the release of the GSEs with counting the income from G-fees as income to the government for the next 10 years? Seems like the warrant value may be losing out to crony capitalism.
“The budget proposes increasing the guarantee fees charged by Fannie and Freddie by 0.1 percentage point, a move the administration forecasts would raise nearly $25.7 billion over a decade”
Hope to get your thoughts and thank you.
jtimothyhoward?
February 12, 2018 at 2:40 pm
jThere are two issues here. The first is that until Fannie and Freddie are removed from conservatorship (or liquidated), or until the net worth sweep is declared illegal or cancelled, the budget document will show continued receipts from the sweep for the full ten years of the projection.[/[/b There is nothing of any policy significance here; it’s ust budgeting convention. As for the ten basis point increase in guaranty fees, unless there is some discussion about this elsewhere in the document (which I haven’t read, and don’t intend to), I would think that given the large amounts of red ink produced over the forecast horizon by the tax reform package and recent spending agreement, the budgeteers are looking for any credible assumptions they can make that will produce more revenue; every $25.7 billion they can put into their projections makes the projected deficit smaller.
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