Fannie and Freddie Reform Unlikely this Year

Blog posted On March 28, 2017

When Treasury Secretary Steve Mnuchin cited Fannie Mae and Freddie Mac reform as a Trump administration priority, housing professionals across the country began speculating about how reform of the government-sponsored enterprises (GSE) should take place.  Many lobbyists have called for GSE reform for several years, however new information suggests that GSE reform has been pushed back again due to more pressing policy reform issues. 

The Senate Banking Committee has started to hold weekly bipartisan meetings on Fannie and Freddie reforms, but other issues need to be addressed first including the flood insurance program and Dodd-Frank reform.  The Trump administration’s immediate focus is to rebuild the GSE’s depleted capital.  GSE capital buffers are expected to be reduced to 0 by 2018.

At the American Bankers Association Government Relations Summit in Washington, Mark Calabria, chief economist to Vice President Mike Pence, suggested that reforming Fannie Mae and Freddie Mac remains a top priority for the Trump Administration. 

During the financial crisis, Fannie Mae and Freddie Mac received $187 billion in government bailout funds.  To date, the GSEs have repaid $265 billion in dividend payments to the US Treasury.  Whether Fannie Mae and Freddie Mac will face reform soon remains to be seen, but analysts have pushed back their predictions to 2018 or later.  

Sources: Reuters, HousingWire