Fannie Mae and Freddie Mac's ongoing conservatorship impedes shareholder rights and leaves taxpayers with substantial liabilities. Edge One asserts that the U.S. Treasury's preferred shares have been adequately repaid, given over $300 billion in dividends against the $187 billion drawn since 2008. Despite Fannie and Freddie backing a significant portion of the U.S. mortgage market, they continue to face political interference. Edge One suggests a capital baseline of around 2.5% and risk-based buffers to enhance stability and accountability following a potential exit from conservatorship.
The prolonged control of these two vital institutions violates fundamental shareholder rights, distorts governance and leaves taxpayers with trillions in contingent liabilities.
Edge One's proposal calls for a leverage-style capital baseline of about 2.5%, supplemented with risk-based buffers and credit risk transfer (CRT) programs to shift exposure to private investors.
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