Fannie Mae Preferred S (FNMAS)

[rosen62]

The Treasury has no legal authority to liquidate Fannie and Freddie. That authority has been granted by Congress to the FHFA via HERA 2008. It is FHFA who decides whether the route continues to be c-ship, r-ship or exit. And only under specific circumstances FHFA will claim receivership. I am not saying it cannot happen. Congress too can come out with a bill that includes a short receivership transition scheme prior to overhaul. Or Congress could amend HERA 08. What Treasury can do is to terminate its funding commitment and this will create a technical issue as the companies are under-capitalized. This, in my view, will be suicidal.