Eight years after their initial $187.5 billion lifeline in 2008, the debate rages on as to what should be done about Fannie Mae and Freddie Mac. Bloomberg staffer Joe Light takes a look at the fact that the government has collected enough money to bail them out should the economy stumble again, but there is still no real long-term solution.
The belief is that the most serious risk is that the government sponsored enterprises (GSEs) have no capital as they have paid money to the Treasury, causing some to question the terms of the bailout. Multiple ideas have been suggested for the future handling of the GSEs:
Plenty of ideas have been floated. Former FHFA Director Edward DeMarco and ex-Senate Republican staffer Michael Bright have proposed turning the GSEs into lender-owned insurers. Others have suggested transforming them into what amount to mortgage utilities, with capped rates of return, essentially keeping them in place in a more regulated form.