The GSEs have a legal problem (the SCOTUS Collins decision) and a capital problem (GSEs cant raise equity capital as is after Collins). Herewith, a simple structural solution.
“President Biden fired Social Security Commissioner Andrew Saul on Friday amid an ongoing dispute over his leadership of the independent agency responsible for administering retirement and disability benefits.”
I haven’t heard anyone propose “splitting the baby” before. It would seem to satisfy concerns from Maxine Waters, Elizabeth Warren, Sherrod Brown et al about mortgage support to low and middle income families. But I think the politicians want control over all the mortgage market, not just the low income part of it. Plus, Treasury has gotten accustomed to the money siphoned off from the GSE’s and will be loath to give it up.
No matter how great I consider the idea, why not call it “A Solution” rather than “The Solution”? Seems to me that the essential path to exiting conservatorship includes ending the NWS, counting senior pfds paid, settling lawsuits, dealing with junior pfds, doing something with the warrants and raising capital. All those conditions would appear to fall under various scenarios that are not peculiar to spinning off LIH portfolio.
Regarding point #10, how does the proffered solution depoliticize the GSEs given that affordable housing isn’t the only political piece in the GSE puzzle?
new and existing legal battles on 80% warrant may last way beyond Biden's term. He needs to be reasonable if he wants to get GSEs into his desired state.
It is a long overdue issue. The resolution needs to be innovative.
1. UST to buy out all commons at $10. Total investment is $20B.
2. UST to buy out all JPS at face value. Total investment is $36B.
3. The GSEs are privatised by UST. UST to waive all the PSPA loans, which have actually been fully repaid already.
4. UST to revise the charters for the GSEs and re-IPO them in the market. I expect the re-IP (commons and new JPS) can raise $200B for the GSEs.
Pros:
1. USG can do away all the lawsuits and the need to refund the NWS overpayments of $30B.
2. USG is free to re-shape the GSEs
3. It can be done in 12~18 months
4. It is a win-win to both USG and the GSE shareholders
Paul, gov is stupid and stubborn.
“President Biden fired Social Security Commissioner Andrew Saul on Friday amid an ongoing dispute over his leadership of the independent agency responsible for administering retirement and disability benefits.”
Saul says Biden cannot remove him...
https://www.foxnews.com/politics/biden-fires-social-security-commissioner-andrew-saul
I haven’t heard anyone propose “splitting the baby” before. It would seem to satisfy concerns from Maxine Waters, Elizabeth Warren, Sherrod Brown et al about mortgage support to low and middle income families. But I think the politicians want control over all the mortgage market, not just the low income part of it. Plus, Treasury has gotten accustomed to the money siphoned off from the GSE’s and will be loath to give it up.
No matter how great I consider the idea, why not call it “A Solution” rather than “The Solution”? Seems to me that the essential path to exiting conservatorship includes ending the NWS, counting senior pfds paid, settling lawsuits, dealing with junior pfds, doing something with the warrants and raising capital. All those conditions would appear to fall under various scenarios that are not peculiar to spinning off LIH portfolio.
Regarding point #10, how does the proffered solution depoliticize the GSEs given that affordable housing isn’t the only political piece in the GSE puzzle?
Appreciate your service to the cause.
new and existing legal battles on 80% warrant may last way beyond Biden's term. He needs to be reasonable if he wants to get GSEs into his desired state.