The Federal Housing Finance Agency is preparing the government-sponsored enterprises for life after conservatorship, acting director Sandra Thompson said Thursday.
The pricing review is part of a multi-step process to unwind the GSEs from government control, she explained.
“We're preparing the enterprises to adjust to supervision in a way that they would be regulated outside of conservatorship,”
Thompson said.
“I don't think anybody ever expected the enterprises to be in conservatorship as teenagers, 14 years,” she said. “When I started, I think they were in the third grade now they've moved on to high school.”
Thompson said Calabria’s effort to enable the enterprises to retain earnings and build capital has put them on a path toward independent viability, but added there remains a “huge gap” between what they have and what they need.
In addition to bolstering capital reserves, Thompson said the FHFA must engage with the Treasury Department, which has supported Fannie and Freddie through senior preferred stock purchases to the tune of $190 billion, to what, if any, role the government will play in the enterprises after their initial public offerings.
Thompson said the FHFA will seek to clarify the relationship between the government and Fannie and Freddie moving forward before opening them up to private investors. This includes whether there will be a consent agreement in place, how much autonomy the enterprises will have in setting rates and how they will be regulated.
“There are just questions that investors will want answers to before they put a dollar in and those are some of those questions I cannot answer,” she said.
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