Can Fannie, Freddie be overhauled without Congress?
By Hannah Lang
The Trump administration has said more than once that it welcomes legislative reform to fundamentally restructure Fannie Mae and Freddie Mac. But the Federal Housing Finance Agency has also made clear that it stands willing to do the heavy lifting itself. That begs an obvious question: Would administrative reform of the government-sponsored enterprises be decisive, or would policymakers merely be settling for a backup plan to make up for Congress’ inability to act? A new report by analyst Karen Shaw Petrou and her firm, Federal Financial Analytics, suggests FHFA’s actions may be sufficient to reform the GSEs. Their analysis warns those skeptical about FHFA Director Mark Calabria’s apparent willingness and authority to overhaul the system not to underestimate the range of options at his disposal. But an FHFA-led reform effort could be messy, the report concedes. “We think [Calabria lays] out hard-headed options to concluding the GSE conservatorships,” the report says. “Only two goals appear inviolable: the 30-year [fixed-rate mortgage] stays and as much taxpayer risk as possible goes away. As we map out different paths to these goals under current law — and there are several thoroughly plausible ones — we foresee significantly different ranges of market winners and losers.”