Treasury May Offer Options, Shy Away from Specifics, in GSE Plan

By Donna Borak


The Treasury Department’s continued silence on its pending plan for the future of Fannie Mae and Freddie Mac is fueling suspicion that the administration does not have a concrete proposal. Instead, analysts, industry representatives and academics are increasingly convinced that the White House will offer guiding principles outlining its philosophy on the government-sponsored enterprises and potentially offering some alternatives vetted by the Treasury on how to approach the matter. “We do believe they will come out with guiding principles, not an absolute restructuring plan,” said Scott Griffith, the chairman of the GSE presidential advisory group at the National Association of Realtors. Industry observers are divided on whether such a move would make sense. Some said it would be a mistake to fail to produce a concrete proposal, considering that the GSEs have been in conservatorship for more than two years and that the administration has previously punted on the issue. “It is incumbent for the administration to come up with a plan,” said Cornelius Hurley, the director of the Morin Center for Banking and Financial Law at Boston University. “Punting it out another month or two is not an option financially or politically.” Karen Shaw Petrou, the managing partner at Federal Financial Analytics, said another delay would give GOP critics more ammunition against the administration. “It would be a Christmas present, belatedly, to the Republicans, and the administration knows that,” said Shaw Petrou. It would be “exposed again to irate editorials and criticisms that they are well aware of. That doesn’t mean that they have to have the 700-page bill drafted with every contingency considered, but kicking the can down the road would expose them to political fire.”