In this analysis, we wrap up our series of strategy-focused assessments of FHFA’s capital proposal with an analysis of whether it could as intended free the GSEs from conservatorship’s yoke in the relatively short near-term. As we have shown, the NPR is complex, model-driven, and laced with questions on alternatives that, if adopted, would lead to widely-different outcomes. And, as we’ve also noted, externalities – most immediately COVID’s macroeconomic impact and eventually the election – affect GSE capitalization and thus the trajectory for structural change.
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