Update on Fannie Mae and Freddie Mac

Have you been wondering what the heck is going to happen with the former king and queen of the mortgage industry?  Well, so has everyone else, including the Obama Administration.  They have been discussing what to do, and have yet to come up with what the future will hold for them.  But there is definitely progress, to say the least.  Some options include, returning them to their previous status as GSEs with the paired interests of maximizing returns for private shareholders and pursuing public policy home ownership goals, incorporating the GSEs functions into a federal agency, a conversion to providing insurance for covered bonds, gradual wind-down of their operations and liquidation of their assets, or the dissolution of Fannie Mae and Freddie Mac into numerous smaller companies.  Although the options are there, officials have stated that no one option is under strong consideration at the moment.  Under the “good bank/bad bank” resolution taxpayers could lose some of their $85 billion in Fannie and Freddie investments.  We will have to wait and see what happens, as the decision is not going to be made until early 2010.

What do you think should happen with Fannie Mae and Freddie Mac?

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