The Case for Ending the GSE Conservatorships
As the financial crisis rocked the nation’s economy in 2008, following the worst-ever housing market collapse in history, the U.S. government stepped in to stabilize the GSEs by putting them in conservatorship. The goal was always to eventually return them to normal operations.
In this arrangement, the Treasury acquired senior preferred stock and secured a 79.9% ownership stake in both Fannie Mae and Freddie Mac.
Since the acquisition, the government has put $191 billion into the companies.
Over the course of the conservatorship, the GSEs paid over $301 billion back in dividends, fully repaying the initial federal investment on the original terms.
As a result of post-crisis reforms, the GSEs are stronger than ever and ready to return to the private sector. The GSEs have restructured their businesses, retained earnings, strengthened their balance sheets, and built substantial equity cushions against future losses.
Yet the federal government continues to hold a supermajority in shares of both companies. The $150 billion value of these remaining securities can be realized following the GSEs' exit from conservatorship, as the government gradually sells the securities into the free market.
It’s time to use this money for the teachers, firefighters, police officers, bus drivers, nurses, construction workers, and other essential workers who form the backbone of our society.
It’s time to ensure American housing is built by the American workforce. It’s time to get this done.
The time is now to ensure that every American can live the American Dream.
Don’t forget us.
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The time is now to ensure that every American can live the American Dream.