Your SPS conversion push is a catastrophe for FNMA commons, taxpayers, and Treasury, spiking mortgage spreads and rates. Treasury Secretary Scott Bessent sees through your nonsense, stating in February 2025 (Bloomberg), “The priority for a Fannie and Freddie release—the most important metric I am looking at is ANY study or HINT that mortgage rates would go up.” In May 2025 (HousingWire), he shut it down: “The ONE requirement for this privatization is that they are privatized in such a way that mortgage spreads do not widen.
“Converting the $190B SPS into common shares would dilute my stock to nothing and tank the $6.6T Agency MBS market by killing the implicit guarantee, forcing investors to demand higher yields. PIMCO’s May 2025 report, “The Future of the GSEs: Do No Harm,” warned, “A rushed exit… risks higher mortgage rates and reduced housing affordability.” Laurie Goodman (National Mortgage News, January 2025) schooled you: “Privatization without a government guarantee would likely increase mortgage rates, as investors demand higher yields for added risk.” DoubleLine Capital’s January 2025 paper said, “Uncertainty could trigger rating downgrades of GSE-backed bonds… very disruptive to the overall mortgage market.
”MBA’s Bob Broeksmit (February 2025 convention) added, “The market needs an explicit government guarantee on mortgage-backed securities [to avoid] increasing mortgage rates and a decline in confidence among investors.” Inside Mortgage Finance (January 2025) nailed it: “Critics argue that… without an explicit government guarantee, MBS investors will demand wider spreads to cover the added credit risk.”
Your SPS delusion would widen MBS spreads by 50-100 bps, per DoubleLine and J.P. Morgan, pushing 7% mortgages to 8%, adding $100-$200/month to a $300,000 loan. That hammers taxpayers with higher costs, my commons with dilution, and Treasury with housing market chaos. With Fannie $40B short of its $187B capital goal, Bessent’s betting on retained earnings, not your disastrous plan.
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