The Charter Act is what sets the GSEs as shareholder owned, publicly traded entities - by law. And neither FHFA, Congress, or POTUS has had the ability to change the law since. CBO completely ignores the law in it's analysis.
HERA establishes the FHFA and stipulates what happens in Conservatorship and Receivership. Should the GSEs go into Receivership, a new bridge entity would be established, transferring the assets and liabilities to the new company, with the requirement that the new company have more assets than liabilities. (This would likely eliminate Common shareholder claims, eliminate JPS claims, and could truncate Treasury's stake). Furthermore, it would have just 5 years to sell off 80% of the new stock to investors so the GSE charters could be transferred to the new owners. That would be a HUGE problem if the investors don't know whether the intention is for the Charters to be revoked/terminated by Congress, or if they will be allowed to transfer to new owners and exist in the market after this 5 year period. Trying to sell $170-206 Billion dollars worth of new stock in a short amount of time and in an uncertain environment is not a first-choice or second-choice scenario.
Receivership is extremely unlikely. Which makes me wonder why CBO would try to make it sound like one of the two main options? What is the agenda here?
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