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An online petition calling for the end of the Federal Housing Finance Agency (FHFA)'s conservatorship of Fannie Mae and Freddie Mac has been posted to the White House's "We the People" Web page.
The conservatorship of the two GSEs has been a lightning rod for controversy, particularly in the last year. Fannie Mae and Freddie Mac have been under conservatorship of the FHFA since September 2008 "to preserve and conserve their assets and property and restore them to a sound financial condition so they can continue to fulfill their statutory mission of promoting liquidity and efficiency in the nation's housing finance markets," according to FHFA's website. The two GSEs received a combined $188 billion in bailout money from the government in 2008, but have since returned to profitability.
Opponents of the conservatorship, such as those backing the petition, contend that the conservatorship has served its purpose and is no longer needed. The petition was posted online on December 20 and reported to have been created by a resident of Minnesota. The petition reads as follows:
"WE, the undersigned, hereby petition our U.S. Federal Government and our President Obama for the immediate release from Federal Government Conservatorship for Freddie Mac and Fannie Mae, by Executive Order of President Obama, or Director Melvin Watt, or any other means whereby full and immediate release from conservatorship would be effected.
"Whereas: the extraordinary economic circumstances under which the conservatorship of Freddie Mac and Fannie Mae might have been necessary have passed, Freddie Mac and Fannie Mae have fully repaid the Federal Government every dollar provided, further conservatorship serves no useful purpose; for these and other compelling reasons the conservatorship of Freddie Mac and Fannie Mae should be ended immediately."
The petition's goal is to collect 100,000 signatures by January 19, 2015. As of December 31 at 10 a.m., there were 907 signatures on the petition.
At the center of the debate surrounding the conservatorship has been the cost to taxpayers and investors. Several lawsuits have been filed against the federal government in the last year and a half by the GSEs' largest investors over the sweeping of Fannie Mae and Freddie Mac profits into Treasury, including two by Pershing Square Capital Management and its CEO, William A. Ackman; one by Perry Capital; and one by Fairholme Funds. The investors claimed in the lawsuits that the diverting of GSE profits into Treasury equates to taking private property for public use without "just compensation," a practice forbidden by the Fifth Amendment of the U.S. Constitution, and that diverting GSE profits created a "windfall" for the government while shortchanging GSE shareholders. The Perry and Fairholme suits were dismissed by a judge; Ackman voluntarily withdrew one of the Pershing Square suits, while the other remains active.
Earlier this month, the FHFA and its director, Mel Watt, drew criticism from many lawmakers with the announcement the Agency would resume diverting GSE money into the Housing Trust Fund and Capital Management Fund, a practice that was suspended in November 2008.
Efforts have been made recently not just to end the conservatorship, but to eliminate Fannie Mae and Freddie Mac altogether. U.S. Senator Bob Corker (R-Tennessee) introduced S.1217 in June 2013, proposing a detailed plan to eliminate Fannie Mae and Freddie Mac and replace them with the Federal Mortgage Insurance Corporation, a private insurance company system with a government backstop. The bill asserts that eliminating the two GSEs would save the government billions in the next 10 years. A year and a half after being introduced, however, the bill has yet to go to either the senate or house for a vote.
