The mortgage giants were put under government control when the bursting of the housing bubble triggered the financial crisis of 2008. Now the Biden administration must decide their future.
Advisers to Biden say he’s in no rush to privatize the companies and will instead focus on ways to use them to boost housing affordability and ownership. By buying and securitizing mortgage loans, Fannie and Freddie backstop about half of the nation’s $11 trillion mortgage market.
Under the agreement reached during the Great Recession, Fannie Mae and Freddie Mac were allowed to retain just $45 billion of earnings between them, turning profits beyond that over to the Treasury, but now will be able to keep roughly $280 billion as a cushion against possible losses.
Treasury officials said they are unwilling to significantly restructure the government’s senior stakes in the firms, now valued at roughly $230 billion, which would have put the companies on a path to exit government control.
[WSJ] — Sasha Jones