Fannie Mae and Freddie Mac Allowed to Retain $45 Billion in Capital

The Department of the Treasury and the Federal Housing Finance Agency announced on September 30, 2019, that it will allow the government-sponsored enterprises to retain up to $45 billion in combined capital as they prepare to leave conservatorship. Earlier this month, Treasury Secretary Steven Mnuchin said the administration is currently looking to end the profit sweep of Fannie Mae and Freddie Mac. Mnuchin explained that not only was President Donald Trump trying to end the profit sweep, but he was looking to do it soon. At the time, Mnuchin said:

We are actively negotiating an amendment to try to get it done by the end of the month.

Now, the FHFA and the Treasury made a joint statement saying the GSEs will be allowed to retain capital as the administration continues to work toward ending the conservatorship. FHFA Director Mark Calabria said:

The enterprises are leveraged nearly 1,000-to-one, ensuring they would fail during an economic downturn – exposing taxpayers once again. This letter agreement between Treasury and FHFA, which allows the enterprises to retain capital of up to $45 billion combined, is an important milestone on the path to reform.

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