Shrink-Wrap?
Following Secretary Mnuchin’s remarks to Senate Banking about an administrative way out of the GSE conservatorship, we laid out his options under current law. One might have thought that conservatives would flock to a conservatorship solution including a GSE receivership and subsequent privatization, but that’s not the course chosen by a group of housing analysts at AEI. Here, we assess a paper released yesterday that appears to assume that Fannie and Freddie are here forever, albeit in a sharply-reduced role. This option is also possible, at least to a limited extent, under current law as long as the White House is willing to consign housing finance to ever-lasting conservatorships. We doubt it will not only for policy and political reasons, but also because the practical obstacles to the AEI plan are, as detailed below, quite formidable.

GSE-022818.pdf