Fannie Mae-No Politics (FNMA)

[bmp152]

hey stockprofitter, I don't have the ability to PM. Although I've reposted your question here, I hope you don't mind. I think it's good discussion for the board:

"can the government sell anything while fnf under conservatorship??
Would they not have to be released from conservatorship first??
would the government have any say after Fnf are released from conservatorship??"

My response is: I have no idea how this proposal would work. As conservator the FHFA has a fiduciary duty to maintain the soundness and solvency of the GSEs. Selling them outright may likely violate that duty. And even if the sale doesn't violate their profitability, certainly reducing their marketshare to 30% does. As you point out, if FnF are released from conservatorship, then what authority does FHFA have to mandate their sale? Seems to me like a catch 22 that hasn't been well thought out in terms of feasibility.

I proposed this in a post the other day. I don't see why Fannie and Freddie cannot retain their market share, but backed by an explicit government guarantee and be required to contribute 5% of equity/earnings/revenue to a Housing Emergency Relief Fund that would protect against a cyclical and unavoidable housing collapse in the future. To me, there is no reason for Ginnie Mae to be transitioned into the role that FnF are already serving well.

Thoughts?