Restructuring Fannie Mae and Freddie Mac

 

Conservatorships of Fannie Mae and Freddie Mac can remain in place as efforts are undertaken to stabilize the enterprises and restore confidence in financial markets.
Courtesy of Wikipedia Commons

On September 6, 2008, the Federal Housing Finance Agency placed Fannie Mae and Freddie Mac in conservatorship out of concern that their deteriorating financial condition and potential default on $5.4 trillion in financial obligations threatened the stability of financial markets.

Since then, the Department of the Treasury has provided nearly $100 billion to the enterprises. Congressional Budget Office estimated that the total cost of Treasury financial assistance will be nearly $400 billion. Moreover, the Board of Governors of the Federal Reserve System (Federal Reserve) has committed to purchasing up to $1.45 trillion in the debt and securities of the enterprises (and other entities) to support housing finance, housing markets, and financial markets.

FHFA said that the conservatorships were not intended to be permanent. Over the longer term, Congress and the executive branch will face difficult decisions on how to restructure the enterprises and promote housing opportunities while limiting risks to taxpayers and the stability of financial markets.

While housing needs to be promoted to help the landscape industry, this country also needs to make sure its financial institutions are viable.

Government Accountability Office summarized the enterprises' performance in achieving key housing mission objectives; identified various options for revising the enterprises' long-term structures; analyzed these options in terms of their potential capacity to achieve key housing mission and safety and soundness objectives; and discussed how the federal government's management of the conservatorships and response to the housing crisis could affect any transition.

– Courtesy of GAO