Fixing Fannie

While the Trump administration ramps up its rhetoric about reforming housing finance, ignore it. Absent Congressional action, there is little that can meaningfully be done. The FHFA can allow Fannie and Freddie to keep their profits but that’s symbolic when it will easily take a decade using that approach to recapitalize both. Anything more substantive will destabilize this market and raise mortgage rates; not happening in an election year.