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Fitch Ratings affirmed that while Fannie Mae and Freddie Mac maintained a "Stable Rating Outlook" in April due to direct financial support from the U.S. government, the ratings company said it expected the controversial FHFA's conservatorship of the two Enterprises would continue indefinitely. Fitch said in the report that "Despite significant legislative efforts over reform of the housing market during the past year, the government-sponsored enterprises remain in conservatorship without a clear exit path."
A recent stress test administered by the FHFA determined that the two GSEs would need another taxpayer bailout, this time of up to $157 billion, when certain hypothetical adverse economic conditions were applied. The Fitch report examined the prospect of the GSEs having to take another draw on Treasury, and determined that "the likelihood of additional draws from the U.S. Treasury will increase over time as the GSEs’ own capital reserve buffers are reduced to zero by 2018, particularly if economic conditions worsen materially or interest rates change rapidly."
The U.S. Court of Appeals for the District of Columbia Circuit has dismissed a constitutional challenge to the Consumer Financial Protection Bureau brought about by Costa Mesa, California-based support services company Morgan Drexen Integrated Systems. Morgan Drexen sued the CFPB in 2013, claiming the Bureau overstepped its bounds when it charged the company with misleading consumers and illegally charging advance fees for debt relief services.
