Coming Out of Conservatorship: Developing an Exit Strategy for Fannie and Freddie
David J. Reiss
Brooklyn Law School
June 24, 2009
Lombard Street, July 2009
Brooklyn Law School, Legal Studies Paper No. 155
This brief article reviews the various policies that the Obama Administration can choose from as it considers how Fannie Mae and Freddie Mac should exit conservatorship. It first reviews the benefits and costs associated with the two companies. It then reviews four broad positions regarding the appropriate role of Fannie and Freddie in the housing finance market. It argues that the two companies should be privatized because Fannie and Freddie pose a systemic risk to the financial system, unfairly benefit from their regulatory privilege and do not create net benefits for the American people. Finally, it reviews four concrete plans to fundamentally change Fannie and Freddie’s structure, each involving different degrees of government involvement. It concludes that the two companies should be converted into generic financial holding companies and their public functions be reassigned to various federal instrumentalities.
Number of Pages in PDF File: 12
Keywords: , Freddie, secondary mortgage market, housing finance, privatization, government-sponsored enterprise, GSE
Date posted: June 24, 2009
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