Fannie Mae-No Politics (FNMA)

[DCBill]

Read TH's answer this morning to one blog question about "what's next?

The developments of last week—the jury verdict in the Lamberth trial that FHFA and Treasury “wrongly amended” the senior preferred stock agreement, and the widespread, severe and well documented criticism of the ERCF in the comments made on FHFA’s request for input on Fannie and Freddie’s capital and pricing—both make it easier for the Biden administration to justify and then carry out the badly needed recapitalization and release of the companies. Will it now choose to do so? I wish I knew. I do think, though, that if a change in the status quo towards Fannie and Freddie is to happen before the next election, the impetus for it will need to come from outside FHFA and Treasury—i.e., from some group that includes CEA chair Jared Bernstein, NEC director Lael Brainard and White House chief of staff Jeff Zeints. FHFA Director Thompson and Treasury Secretary Yellen both seem too invested in the fictions about Fannie and Freddie that have dominated their institutions since the conservatorships for them to suddenly become the “change agents” required to pull off a task as ambitious and difficult as recapitalizing and releasing Fannie and Freddie.