FHFA RELEASES FANNIE, FREDDIE CONSERVATORSHIP LETTER

Tuesday, February 2, 2010 - 1:15am

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today sent a letter about Fannie Mae’s and Freddie Mac’s (GSEs’) conservatorship to Reps. Barney Frank, D-Mass., and Spencer Bachus, R-Ala., of the House Financial Services Committee, and Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., of the Senate Banking, Housing and Urban Affairs Committee. The letter addressed FHFA’s plans for the GSEs business activities while they are in conservatorship. The eight-page letter reviews the establishment and purposes of the conservatorship; operation of the conservatorships; and FHFA’s views on the GSEs’ future business activities, including loan modifications and mitigating credit losses, retained portfolio, new products and affordable housing mission. In the letter, DeMarco concludes that the conservatorship cannot be a long term solution, but that, while there are many ways of reorganizing the GSEs, the only option available under the existing law is to reconstitute the GSEs under their current charters.