Treasury's changes to Fannie Mae and Freddie Mac: a step toward accountability?
So, the Treasury Department and FHFA have made some adjustments to the Preferred Stock Purchase Agreements for Fannie Mae and Freddie Mac. Now, they can hold onto a whopping $25 billion and $20 billion in capital reserves respectively. This is supposedly a move to protect taxpayers from future bailouts. But let’s be real—this feels like a band-aid on a much bigger wound. Treasury Secretary Steven Mnuchin talks about these changes as if they’re a significant reform, while conveniently ignoring the broader context of the administration’s overall approach to housing finance. Under Trump, we saw a reckless disregard for accountability and transparency in financial matters. The fact that these modifications were recommended back in 2019 raises questions about why it took so long to implement them. It’s almost as if the administration was dragging its feet until it could claim credit for something that should have been done ages ago. And let’s not forget the irony of Trump’s administration touting taxpayer protections while simultaneously undermining regulatory frameworks across various sectors. It’s a classic case of trying to put lipstick on a pig. If we want genuine reform in housing finance, we need more than just tweaks to agreements. We need a commitment to real accountability and oversight—something this administration has consistently failed to deliver. the article here: https://home.treasury.gov/news/press-releases/sm786.
U.S. Department of the Treasury
Treasury Department and FHFA Modify Terms of Preferred Stock Purchase Agreements for Fannie Mae and Freddie Mac
WASHINGTON – The U.S. Department of the Treasury (Treasury) and the Federal Housing Finance Agency (FHFA) today announced that they had agreed to modifications to the Preferred Stock Purchase Agreements (PSPAs) that will permit Fannie Mae and Freddie Mac to retain additional earnings in excess of the $3 billion capital reserves currently permitted by their PSPAs. Under the modifications announced today, Fannie Mae and Freddie Mac will be permitted to maintain capital reserves of $25 billion and $20 billion, respectively. These changes to the PSPAs were recommended in the Treasury Housing Reform Plan (Plan) released on September 5, 2019. “These modifications are an important step toward implementing Treasury’s recommended reforms that will define a limited role for the Federal Government in the housing finance system and protect taxpayers against future bailouts,” said U.S. Treasury Secretary Steven T. Mnuchin. To compensate Treasury for the dividends that it would have received absent these modifications, Treasury’s liquidation preferences for its Fannie Mae and Freddie Mac preferred stock will gradually increase by the amount of the additional capital reserves until the liquidation preferences increase by $22 billion for Fannie Mae and $17 billion for Freddie Mac. Treasury and each of Fannie Mae and Freddie Mac also agreed to negotiate an additional amendment to the PSPAs that would further enhance taxpayer protections by adopting covenants that are broadly consistent with the recommendations for administrative reforms contained in the Plan. The Plan also recommended that Treasury and FHFA develop recapitalization plans for Fannie Mae and Freddie Mac after identifying and assessing the full range of strategic options. Subsequent amendments to the PSPAs may be appropriate to facilitate the implementation of any eventual recapitalization plans. Copy of the Fannie Mae agreement. Copy of the Freddie Mac Agreement. ####
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It's interesting to see how the administration tries to frame these changes as a victory for accountability when, in reality, they're just a small step in the right direction after years of neglect. The delay in implementing these recommendations from 2019 really shows how little urgency there was to genuinely address the issues in housing finance. It's like they're trying to distract us from the bigger picture by throwing out a few changes and expecting us to applaud.
lmao y’all really need to chill with the TDS, it's honestly pathetic 😂 you’re acting like Trump personally ruined your lives or something, cope harder, snowflakes! these changes are just part of the plan, but you can’t see that because you're too busy crying about everything he does. the guy was trying to fix the mess left by the corrupt elites and all you do is whine about it like a bunch of entitled brats.
i wonder if anyone really believes these changes are gonna fix anything in the long run—like, are we just supposed to accept this as progress? it feels more like a way to keep the status quo while pretending to care about accountability. also, how do we even know this isn’t just a way for them to pat themselves on the back and say they did something without actually doing anything meaningful? lol :).
totally get what you mean... it feels like a classic move, you know? like they just want to show they’re doing something without actually shaking things up... i mean, real change takes guts, and this just feels like a band-aid on a much bigger issue, right? 😂