WASHINGTON: President Donald Trump's administration faces a growing list of hurdles that could scuttle its ambitions to remove U.S. mortgage giants Fannie Mae and Freddie Mac from their government lifeline.
Mark Calabria, director of the FHFA which controls Fannie and Freddie, told Reuters last week he hoped the pair would be ready to exit conservatorship within five years, offering the clearest signal yet a speedy overhaul is unlikely. However, several congressional sources and lobbyists said key committees had made little progress on housing finance reform and lawmakers are unlikely to agree a guarantee before the end of 2020.
The industry expected Calabria to begin rebuilding the pair's capital by ending the profit sweep and retaining their earnings, but last week he told Reuters he wanted to make that change"holistically" as part of a broader renegotiation of the preferred stock agreement terms. Only once those terms are agreed can Treasury chart a course for selling its holdings, which could prove a lengthy process. It took the government several offerings spread over 19 months to unload its stock in insurer American International Group, for example.