Money for Something, Housing for Free
In a new paper, Lew Ranieri, who needs no introduction, and Mike Calhoun of the Center for Responsible Lending float an important new idea along the way to turning the GSEs into the utilities presaged by actions under the Trump Administration to recast the conservatorship.  Noting precedents for Treasury recapture of warrants in prior financial rescues, the paper estimates that the USG’s position in the GSEs amounts to as much as about $100 billion, creating a kitty from which significant new affordable-housing and racial-equity initiatives can be funded.  Given the long odds of substantive Congressional action and Democratic control, this option may be darn tempting even though the paper’s construct poses some policy, operational, and structure challenges – not to mention a few thorny political ones.

GSE-022521.pdf