Refer to the testimony link from Navy original post
I have two takes from the SIFI hearing testimony link below and would like to share with the Longs
".... the most likely exit strategy will be “recap and release,” whereby the GSEs are appropriately capitalized (likely by amending their net profit sweep to Treasury and possibly by some form of public offering) ...."
private placement is not being considered in the testimony. DOA
" .... A simpler way to have the GSEs reduce their risk exposure could be by implementing a policy similar to private mortgage insurance, in which the loan-level coverage is put in place at origination. ...."
It is good if FHFA could consider hedging credit risk before considering what capital cushion is required.