Taking a little bit of his solution from Mel Watt, some from Ed DeMarco and Michael Bright, and more than a little from all the lobbyists, the Senate Banking Chairman has surfaced a GSE-reform proposal to usurp the administrative action Otting clearly indicated is in the offing.  Crapo’s plan – which meets Democrats’ some of the way but so far lacks a bipartisan sponsor – reconstructs Fannie and Freddie as guarantor utilities sharing the market with new entrants under FHFA regulations with Ginnie Mae insurance and a catastrophic-risk backstop.  Bells and whistles – including volume related affordable-housing levies – are outlined, but the most important issues key to assessing whether the new scheme makes business sense remain to be determined.  The politics of this outline is clear; market viability not so much.

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