Long Tussle Over GSEs Just Starting

By Stacy Kaper and Cheyenne Hopkins


Nearly nine months after the government seized Fannie Mae and Freddie Mac, lawmakers are poised to take their first steps this week toward determining the future of the government-sponsored enterprises.But don’t expect any rush to judgment. The issues that first clouded a discussion of what happens next with the enterprises have only deepened since September of last year. The House Financial Services Committee capital markets subcommittee hearing on Wednesday is seen as the opening salvo in what is expected to be a long and contentious debate over whether to privative, nationalize or seek some third alternative for the mortgage giants. Some changes may even occur without Congress. Karen Shaw Petrou, managing partner of Federal Financial Analytics, said that, though the final fate of Fannie and Freddie is likely to remain in limbo for some time, she would not rule out further government actions if the two GSEs continue to experience massive losses. “You could see FHFA taking some aggressive interim steps,” she said.