Replies to post #747161 on Fannie Mae-No Politics (FNMA)

[kthomp19]

So what are the limitations on the power of the FHFA post conservatorships? Did they enumerate those in HERA? Are they broad and open ended, like "maintain safety and soundness and make sure they are committed to affordable housing"?

1) They are set out in Subchapters I and II of 12 USC Chapter 46.
2) See #1.
3) Some are general and some are specific. There are too many examples of each to list them all. I would highly recommend reading through all of Chapter 46, it will answer your questions to a much greater extent than I can. And it isn't limited to 15 posts per day!

The traditional problem with so many of these federal government agencies is that the US Congress in their enabling and subsequent statutes grants them these open ended mandates and authorities and they bend and twist them to carry out a POTUS action that might never make it through the US Congress.

I agree. It is quite lamentable.

Wouldn't the US Government maximize its profits even more by turning the Cash Net Worth Sweep on?

In the long run, perhaps. In the short run certainly not. Selling the converted seniors lets Biden realize more money up front and he is only guaranteed to be in office for another 23 months.

The cash NWS also puts the housing market more at risk by depleting FnF's capital at a time they need to be building it. The "easy money" of the cash NWS would come with a real and significant cost.

At the very least, if Biden really wanted to turn the cash NWS back on he would have to remove Sandra Thompson from her role. She has repeatedly talked about FnF's need to build capital and even mentioned the possibility of an equity raise at one point. If he does remove her in the near future I would be somewhat worried.