Legal Limbo: The Case Against Unilateral Privatization of Fannie and Freddie
When we argued last week that the Trump administration is unlikely to attempt a unilateral privatization of Fannie Mae and Freddie Mac, we were surprised that there were so many questions about our point that the legal framework established by the Housing and Economic Recovery Act of 2008 (HERA) makes it unclear that the Federal Housing Finance Agency could release them from conservatorship unilaterally. Today, we explain this argument in further detail and add what we learned from an important Trump administration official over the weekend.
HERA, enacted in the midst of the 2008 financial crisis, gave the FHFA authority to place Fannie and Freddie into conservatorship to stabilize their operations. However, the law is notably vague about how such conservatorships should end. Unlike the Federal…
