Freddie Mac-No Politics (FMCC)

[FOFreddie]

We should see soon if Chairwoman Waters is relying on the Calhoun Brookings plan for the $ 100bn. Calhoun also talked $ 100bn. The idea is to establish a new subsidiary jointly owned by FNMA and FMCC where the UST stake is held and monetized for equitable housing solutions. The UST equity would be sold off over time. This assumes that the UST could sell its position which probably implies an exit from Conservatorship - it may be possible for the UST to sell its stake to a private equity group in Conservatorship but any investor is going to want freely trading stock which implies an exit.

This probably would run into an Appropriations Clause issue because the reason for Admin Action is intended to avoid Congressional oversight. The All American decision may ultimately have to be decided by SCOTUS. It will be interesting what the shareholder's lawyers include in the Cert petition.

Time is running short. Republicans are likely to control the Senate Banking Committee and the House Financial Services Committee in the next Congress. Admin action would still be possible but Republicans would have incentive to challenge based on Appropriation Clause issues - basically Admin would be spending $ 100 bn of UST funds without Congressional approval