What Should FHFA Do With Fannie Mae?

What Should FHFA Do With Fannie Mae?
By User:AgnosticPreachersKid (Own work) [CC BY-SA 3.0], via Wikimedia Commons

The Federal Housing Finance Agency (FHFA) recently released FHFA’s Draft Strategic Plan for Fiscal Years 2018-2022, a plan produced by the Agency which accounts for the upcoming four years and details FHFA’s priorities as regulator and conservator of Fannie Mae and Freddie Mac. Following its release, FHFA has announced a request for input from Members of Congress, the public, and interested stakeholders.

As you well know, as shareholders of Fannie Mae and Freddie Mac, each of us will be directly impacted by the future decisions of FHFA and any action taken in regards to the GSEs. Given your stake in the Enterprises, I encourage all of you to review the draft plan and respond to FHFA through its request for input form, which you can access by clicking here, before the October 27 deadline. I have taken action by submitting my own comment through FHFA’s submission process, and encourage you to join me in doing the same.

In my submission, I encourage FHFA to allow Director Mel Watt to exercise his statutory authority under the Housing and Economic Recovery Act of 2008 (HERA) and end the GSEs’ woefully inadequate capital reserves by ending the Net Worth Sweep. As instructed under HERA, FHFA has guided the Enterprises back to a safe and solvent condition, accounting for future market liquidity and stability. A continued conservatorship and ongoing quarterly dividend payments will leave the Enterprises at danger’s doorstep in two short months, come January 1, 2018, when each entity is operating on zero capital.

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