Trump Administration Closer to Unveiling Plan for Fannie, Freddie

WASHINGTON—Trump administration officials are getting close to unveiling their plan to return Fannie Mae and Freddie Mac to private-shareholder ownership, according to a new report.

Fannie Mae

The proposal, coming more than a decade after the government seized the firms to save them from collapse, would seek to put the companies on sounder financial footing and then release them from government control, if Congress doesn’t enact a more fundamental overhaul, sources told the Wall Street Journal.

The plan is being developed by the Treasury Department in consultation with a regulator of the companies, the Federal Housing Finance Agency, the Journal said, and it could change as it advances through the Trump administration, works its way through the White House and ultimately is submitted to the president for his approval as early as June.

“The proposal is expected to include a version of what has been called ‘recap and release,’ which would ensure the firms have adequate capital to absorb loan losses in a future housing slump and thus avoid needing another taxpayer-backed bailout,” the Journal reported. “If carried out, the companies could return to a status similar to how they operated before the financial crisis. Still, administration officials would prefer that Congress act on a more sweeping remake of housing finance, and their plan would also make a series of recommendations for lawmakers to consider.”

‘Daunting’ Challenge

Former officials of the companies and housing experts told the Journal the moves could be “daunting,” as shoring up Fannie’s and Freddie’s finances could entail raising more than $125 billion for the firms.

Both companies have been operating under federal conservatorship since the housing crisis of a decade ago.

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Copyright Year: 2019
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