Bradford Or Tim Howard. Certainly Bradford has no credentials.
Tim Howard:
I don’t believe Thompson has an “approach” to getting Fannie and Freddie out of conservatorship: she simply is steering the “good ship FHFA” on the course Director Calabria put it on, which is “Fannie and Freddie can get out of conservatorship when they meet the capital requirements I set for them.” (Thompson did amend those capital requirements slightly, but only to encourage the companies to keep issuing the non-economic CRT securities the investment community so dearly loves.)
As I’ve said frequently, with no access to the capital markets because of the net worth sweep, it will take Fannie and Freddie close to two decades to fill the gap between their current hugely negative core capital position and the 4.5 percent-plus core capital requirement Thompson clearly has no interest in reviewing, let alone changing. Congress could alter that, but it almost certainly won’t (it hasn’t been able to come up with credible Fannie-Freddie legislation in over 13 years, despite the urgings of the banking lobby.) That leaves Treasury—the mastermind (under Hank Paulson) of the original Fannie-Freddie takeovers, and the beneficiary of the (temporarily suspended) net worth sweep and the liquidation preference over the companies’ assets—as the most likely (and arguably only) architect of a potential exit from conservatorship for the companies in the foreseeable future. To date, Treasury Secretary Yellen has to my knowledge made no public statement about anything having to do with Fannie and Freddie. She’s now, however, “on the clock.”
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