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September 6, 2019

White House Unveils Plan to Privatize the GSEs; Restructure MF Caps
By Erika Morphy

WASHINGTON, DC—The Trump administration has released a long-awaited and comprehensive plan that would privatize Fannie Mae and Freddie Mac and also restructure the caps on multifamily lending by the GSEs.

In some ways this is familiar territory for the market—privatizing the GSEs would essentially mean returning them to the status they had before they were taken into conservatorship during the financial crisis. And the Administration has made clear that the backstop would continue after Fannie Mae and Freddie Mac are privatized. Overall, however, the goal of the plan is to limit the GSEs' role in housing finance.

Some elements of the plan could take years to implement, but there are also administrative steps that can be taken right now to nudge things along, according to Alex Pollock, R Street Institute Finance Senior Fellow and former CEO of the Federal Home Loan Bank of Chicago. For example, the capital requirements for Fannie and Freddie could be increased and regulations that especially favor the GSEs over competitors could be removed, he says. Read more.

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