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Coming Out of Conservatorship: Developing an Exit Strategy for Fannie and Freddie

12 Pages Posted: 24 Jun 2009  

David J. Reiss

Brooklyn Law School

Date Written: June 24, 2009


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.

Keywords: , Freddie, secondary mortgage market, housing finance, privatization, government-sponsored enterprise, GSE

Suggested Citation

Reiss, David J., Coming Out of Conservatorship: Developing an Exit Strategy for Fannie and Freddie (June 24, 2009). Lombard Street, July 2009; Brooklyn Law School, Legal Studies Paper No. 155. Available at SSRN:

David J. Reiss (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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