Fannie Mae-No Politics (FNMA)

[obiterdictum]

Read the exec summary of the Sallie Mae doc re: what can be learned. Sallie, Fannie, and Freddie are all GSEs, quasi-private entities with shareholders that includes an inherent conflict of interest between mission charter and increasing shareholder value - check. These GSEs all make loans - check. They all issue/d ABS/MBS - check.

Yes.

At a conceptually high level there is overlap between sallie and fnf. Sallie even dabbled in property loans. But that is where commonalities end. FnF are in the housing market which is materially more complex due to the industry value = trillions. Sallie was in the business of student loans = less impact on the global economy - yes, global economy.

This complexity is not at issue in the comparison for lessons to be learned. The issue raised is the about the federal charters, terminating charters and/or re-chartering as undergone in fact in Sallie Mae's history and as given in the Treasury Housing Reform Plan's recommendations for the repeal of federal charters and re-chartering by FHFA.

Reading the exec summary to me only illustrates the difficulty of passing legislation that would definitively privatize FnF.

It took from 1992 to 1996 to pass legislation (SLMA Reorganization Act - https://www.law.cornell.edu/uscode/text/20/1087%E2%80%933) that terminated the charters and established the path to final privatization in 2004. see: https://www.treasury.gov/press-center/press-releases/Pages/js2173.aspx

And given the current political environment which I believe is significantly different from the mid-90s, passing any significant legislation today is quite difficult.

Yes. That is so. There is a deep and hostile political party and congress divide that militates against legislative action. And these conditions are what serious long term investors consider.

I still believe FnF can exit conservatorship without Sallie Mae-like legislation being needed.

Yes. There is no need to wait for legislation of any kind. The conservatorships can end with two signatures, Mnuchin and Calabria, on an amended SPSPA providing Treasury's consent to end the conservatorships and then Calabria's order to end it all.

Waiting to privatize FnF legislatively while still protecting tax payers by raising sufficient capital by a post-conservatorship FnF is certainly possible.

Indeed.

There are a plethora of ways to get it done.

Yes. And if Trump wins the election, there will be more than enough time to do it all.