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Treasury Discussed Hiring Houlihan to Advise on Fannie-Freddie

By 

Saleha Mohsin

, 

Austin Weinstein

, and 

Eliza Ronalds-Hannon

September 4, 2019, 10:50 AM EDT

Trump wants to free mortgage giants from U.S. control

Treasury poised to release its Fannie-Freddie plan Thursday

The Treasury Department has held talks with Houlihan Lokey Inc. about hiring the restructuring firm to advise it on Fannie Mae and Freddie Mac, the U.S. mortgage giants that have been under federal control since the 2008 financial crisis, said a person with knowledge of the negotiations.
Retaining the investment bank would be an important step in Treasury’s push to overhaul Fannie and Freddie. But Houlihan Lokey hasn’t been hired and there’s no indication that the Trump administration intends to free the companies from the government’s grip anytime soon. Many hurdles remain and the process is fraught with political and technical difficulties.
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A Treasury spokesman denied that the agency is holding current discussions with any advisory firm. Still, bringing on an outside expert could prove crucial as the administration enters a new phase on housing-finance policy.
On Thursday, Treasury is expected to released its long-anticipated plan -- requested by President Donald Trump -- for ending Fannie and Freddie’s conservatorships, said people familiar with the matter who asked not to be named because the report’s status hasn’t been publicly disclosed.

Shrinking Footprint

Whatever Treasury comes up with, including proposals for Fannie and Freddie to build up their capital cushions and reducing the companies’ footprints in the mortgage market, would still face a long implementation process. Houlihan Lokey, which is known for working on bankruptcies involving Lehman Brothers Holdings Inc. and Enron Corp., could advise on much of that work.

In an emailed statement, the Treasury spokesman said Wednesday that there is no merit to any report that Treasury is currently in talks to contract or hire any firm to serve as a financial adviser to the department on matters related to Fannie and Freddie.
Houlihan Lokey didn’t respond to a request for comment.
Figuring out a fix for Fannie and Freddie, the biggest outstanding issue from the 2008 meltdown, has long confounded politicians and policy makers. The companies were taken over as the housing market tanked, and bailed out with $191.5 billion in taxpayers funds. They have since become profitable again, paying more than $300 billion in dividends to the Treasury in recent years.

https://www.bloomberg.com/amp/news/articles/2019-09-04/treasury-discussed-hiring-houlihan-to-advise-on-fannie-freddie