AEI Event Video: The Future of Fannie Mae and Freddie Mac

Hosted by the American Enterprise Institute.

Event Summary

On March 23, AEI’s Howard Husock hosted experts to examine the role of Fannie Mae and Freddie Mac—enterprises that guarantee roughly 70 percent of US mortgages and are central to housing finance. Panelists emphasized that this uniquely American system concentrates risk within government-controlled entities, exposing markets to political influence and contributing to distortions in housing prices. Speakers traced the evolution of the government-sponsored enterprises (GSEs) from hybrid public-private institutions to entities effectively controlled by the federal government under conservatorship since the 2008 financial crisis. A central concern is the GSEs’ implicit federal guarantee—unconditional and practically free—allowing public risk to generate private or quasi-private gains.

The panel outlined three main paths forward: full government ownership, privatization with explicit payment for guarantees and stronger capital requirements, or continued conservatorship under the Federal Housing Finance Agency. Panelists broadly favored a smaller, more disciplined model—treating the GSEs more like large banks—and agreed on the need to shrink their footprint by limiting the size of purchasable mortgages, an incremental reform within regulatory authority. They added that technological improvements to mortgage processes may enhance efficiency. Still, in the absence of sustained political pressure, conservatorship may persist, leaving fundamental structural issues unresolved.

—Hadar Zeevi

Agenda

4:15 p.m.
Registration Opens

4:30 p.m.
Opening Remarks:
Howard Husock, Senior Fellow, American Enterprise Institute

4:40 p.m.
Panel Discussion

Panelists:
Anne Canfield, Partner, Majority Group
Edward J. Pinto, Senior Fellow, American Enterprise Institute
Alex J. Pollock, Senior Fellow, Mises Institute

Moderator:
Howard Husock, Senior Fellow, American Enterprise Institute

5:45 p.m.
Q&A

6:00 p.m.
Adjournment

Event Description

Fannie Mae and Freddie Mac, though in conservatorship, still play an outsized role in the US housing market, guaranteeing about half of all outstanding residential mortgages and representing a massive $7.8 trillion in assets. They are without doubt systemically important concentrations of mortgage risk.

Historically, they were privately owned companies with the public subsidy in the form of a free implicit guarantee of their obligations by the US Treasury. This guarantee led to their 2008 bailout, when they received $187 billion in taxpayer support; the government’s equity interest has since grown to $366 billion.

Join AEI for a discussion on how Congress could approach Fannie and Freddie’s future structure, ownership, role in the housing market, and the extent of the risk to the Treasury they will be allowed to pose.