Fannie Mae-No Politics (FNMA)

[DCBill]

Hoard's primary point in his response today;

Anyone who would like to see the companies’ activities restored to anything close to their former level of effectiveness should be advocating for two things: much more realistic capital requirements for them, and a sensible resolution to their exile from the capital markets because of the net worth sweep and Treasury’s liquidation preference. FHFA’s RFI on guaranty fees is a perfect vehicle for doing the former.

The latter will very likely have to be initiated by someone outside the Treasury Department. Secretary Yellen does not appear to have taken an interest in the issue, and I suspect that most of what she knows about Fannie and Freddie’s plight isn’t true, because she’s gotten that knowledge from the careerists at Treasury, who continue to tell the same false story about the companies that they invented when their goal was to “wind down and replace” them with an alternative more to their liking, rather than the now-consensus objective for them of recapitalization and release. I think it will take some combination of Council of Economic Advisers chair Jared Bernstein and National Economic Council director Lael Brainard (on the policy side) and White House Chief of Staff Jeff Zeints (on the political side) to get “recap and release” on the table, and the work to do that, if indeed in commences, almost certainly will be done behind the scenes before there is any public indication that it may be going on.