We took some time for our analysis of yesterday’s Senate Banking hearing about designating Fannie and Freddie as systemically-important financial institutions (SIFIs) or systemic financial market utilities (FMUs) because much said does not take full account of the statutory implications of either action.  There are significant constraints on what the White House, Treasury, and/or FHFA can do if the GSEs are to be redefined without going through the trouble of statutory change.  That the Banking Committee chairman is actively exploring designation tells us that he is increasingly despairing of legislative change – and no wonder.

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