R Street’s Pollock on Jumpstart Legislation, Capital Reserves for SIFIs
Channel: R Street Institute
Date: 2017-12-29

R Street Institute is a nonprofit, nonpartisan, public policy research organization. Our mission is to engage in policy research and outreach to promote free markets and limited, effective government.

We believe free markets work better than the alternatives. We also recognize that the legislative process calls for practical responses to current problems. To that end, our motto is “Free markets. Real solutions.”

We offer research and analysis that advance the goals of a more market-oriented society and an effective, efficient government, with the full realization that progress on the ground tends to be made one inch at a time. In other words, we look for free-market victories on the margin.

Learn more at https://www.rstreet.org/
Follow us on Twitter at @RSI
Find us on Facebook at https://www.facebook.com/RStreetInstitute/
Find us on LinkedIn at https://www.linkedin.com/company/r-street-institute/ The podcast summarizes how to have realistic, fundamental reform of Fannie Mae and Freddie Mac.  This requires having them pay a fair price for the de facto guarantee from the taxpayers on which they are utterly dependent, officially designating them as Systemically Important Financial Institutions (SIFIs) which they obviously are, and having Treasury exercise its warrants for 79.9% of their common stock.  Given those three steps, when Fannie and Freddie reach the 10% Moment, which means economically they will have paid the Treasury a full 10% rate of return plus enough cash to retire the Treasury's Senior Preferred Stock at par, Treasury should consider their Senior Preferred Stock retired.  Then Fannie and Freddie could begin to accumulate retained earnings and begin building their capital in a sound and reformed context.