GSEs Move Closer to Public Offering

The FOX Business Network is reporting that the Federal Housing Finance Agency (FHFA) is moving close to selecting a Wall Street financial adviser to guide the agencies through a public offering. FOX notes that this offering could be among the largest stock sales in history, and may put the GSEs further on the path to privatization

Among the outfits that are said to have been interviewed by the FHFA for the role are investment banks such as Perella Weinberg Partners, and possibly PJT Partners, a firm run by former Morgan Stanley investment banking chief Paul Taubman.

FHFA Director Mark Calabria has noted that between $150 billion and $200 billion will need to be raised for the stock sale, which FOX notes is one of the largest in history. Fannie Mae and Freddie Mac are currently building the capital necessary to get out of conservatorship, but there is still a little way to go, according to Federal Housing Finance Agency (FHFA) Director Mark Calabria. He recently spoke with FOX Business about the GSEs leverage and Fannie and Freddie's path ahead.

"I believe that under the statute I am required to fix [Fannie and Freddie]," Calabria said.

"Fannie and Freddie are less leveraged than when I started," Calabria added. "We're going in the right direction."

According to Calabria, regulators will know what the target capital level for Fannie Mae and Freddie Mac will be sometime next year, noting that he'd feel comfortable with "a whole lot more than they have today."

Fannie Mae reported a net income and a comprehensive income of $4.0 Billion for Q3 2019, up from a net income of $3.4 billion and comprehensive income of $3.4 billion for the second quarter of 2019, while Freddie Mac posted a $1.7 Billion net income. According to the GSEs, these incomes represent yet another step toward adding the capital necessary to move toward private ownership.