Fannie Mae-No Politics (FNMA)

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Legislative Experts Question Legality of Treasury’s GSE Moves

In an article in National Mortgage News, two legislative experts said that the Treasury Department has exceeded its authority by keeping Fannie Mae and Freddie Mac in conservatorship for so long and taking all their profits.

Michael Krimminger, a former General Counsel for the Federal Deposit Insurance Corporation, and Mark Calabria, a former top aide to Senate Banking Committee Chairman Richard Shelby, said Treasury’s actions violate the Housing and Economic Recovery Act of 2008 (“HERA”). Krimminger and Calabria assisted in drafting HERA which allows for conservatorship of Fannie Mae and Freddie Mac.

“We very consciously decided in HERA that FHFA would have the sole discretion to appoint a conservator or receiver and it would have the sole discretion to say when that would end,” Calabria said at an event sponsored by Investors Unite, which is suing the Treasury Department over its treatment of the GSEs, the article states.

The article continues by stating a FHFA spokesperson responded that “Director Watt has consistently expressed the view that conservatorship should not be a permanent end state and that it is the role of Congress to determine what the future of the housing finance system should be.” Treasury officials have also said Congress should decide the future role of Fannie and Freddie before FHFA terminates the conservatorships.