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Discussions On Ending Fannie And Freddie Limbo Persist

Jeb Hensarling, Republican

Last week, House Financial Services Committee chair Jeb Hensarling (pictured) unveiled what’s being commonly referred to as the “Republicans' alternative to the failed Dodd-Frank Act.”

Known as the Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs), the new finance reform calls for the end of the federal government’s conservatorship of Fannie Mae and Freddie Mac. The two government-sponsored entities have been in limbo since the financial crisis in 2008, when the government took over the agencies and placed them in temporary conservatorship until the dust settled following the crisis.

Though the conservatorship was amended in 2012 requiring both enterprises to turn over capital each quarter that surpassed a certain threshold, the new CHOICE Act questions whether the conservatorship is still necessary. The Act calls for the Treasury to conduct a study determining whether to end the conservatorship on an annual basis, MarketWatch reports.

“The challenges and risks we are managing are escalating and will continue to do so the longer the enterprises remain in conservatorship,” says Mel Watt, director of the Federal Housing Finance Agency, which regulates Fannie and Freddie. [MW]