Rep. Scott Fitzgerald, R-Wis., recently introduced legislation to end the conservatorships of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. In a departure from previous Republican housing finance plans, the bill acknowledges the need for an explicit federal guarantee for the companies, leaving the Department of the Treasury backstop in place post-conservatorship.
Fannie and Freddie have been under federal conservatorship since the 2008 financial crisis, when they were bailed out by the Treasury Department. In the context of finally exiting from conservatorship, Fitzgerald’s plan mandates that the Treasury exercise its warrants for 80% of the GSEs’ common shares. More ambiguously, it says the department “may” convert it...
