Fannie Mae-No Politics (FNMA)

[navycmdr]

About That Idea of Speeding Up An End to the Conservatorships…

December 2, 2020 - Dennis Hollier - [e-mail]



Treasury Secretary Steven Mnuchin Tuesday more or less nixed the idea that his agency and the Federal Housing Finance Agency would attempt to release Fannie Mae and Freddie Mac from conservatorship before President Trump leaves office in late January.

Testifying before the Senate Banking Committee regarding the CARES Act, the secretary was asked by Sen. Mike Rounds, R-SD, about the appropriate timeline to safely unwind the conservatorships, given the pandemic.

Mnuchin’s reply was straightforward: “Let me just say, I don’t think they should be let out of conservatorship without appropriate capital.” He added, “I think there should be housing reform. I think the appropriate scenario would be for them [Fannie and Freddie] to have real capital and ultimately then be released.”

In late November, there had been press reports that Mnuchin and FHFA Director Mark Calabria might renegotiate Treasury’s preferred stock purchase agreements, which dictate the terms of the conservatorships.

Many shareholders interpreted these rumors as an indication that Fannie and Freddie would be released from conservatorship before President-elect Joe Biden could take office.