On Friday, Treasury Counsellor Antonio Weiss resurrected a GSE-reform idea considered by the Administration in 2009 but junked by the time it issued its 2011 white paper: reconstructing the GSEs into a cooperative along utility lines we have thus called GSE 3.0. As early as 2008, FedFin forecast that this would prove the final shape of the GSEs because complete privatization, total nationalization, or a return to somewhere in the middle wouldn’t work and couldn’t get through Congress. In this report, we assess why Treasury has brought back the utility construct, now building it out following a lot of behind-closed-door work by the Federal Reserve Bank of New York.

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