Fannie Mae-No Politics (FNMA)

[kthomp19]

I hope for a release by consent decree in the first 100 days. That would take the wind out of the sails of all opponents and give Congress motivation to vote on an explicit MBS guarantee.

I think the opposite. A big reason why FnF have remained in conservatorship for so long is that many big buyers of Treasuries want that explicit MBS guarantee and have convinced many at Treasury and in Congress that FnF should not be released without that guarantee. If FnF were to be released without that guarantee anyway, there would be no leverage left for those who want that guarantee.

Taking those basis points and legally guaranteeing the MBS would be a good idea and would reassure the markets.

I don't know how Treasury would justify keeping FnF's balance sheets off those of the US government's in the presence of an explicit MBS guarantee. If consolidation would be forced, it would defeat the entire purpose of FnF's entire existence as "privately owned" companies.