The latest news and analysis from the NYU Furman Center.
Research & Policy
Will the GSEs Repeat 2007 - 2009’s Large Losses?
The housing market has just experienced one of the largest upcycles in history. But what goes up usually does eventually come down - and very rapidly in this case. During the last major downcycle, i.e., when the mortgage bubble burst 15 years ago, the two companies lost the confidence of the markets as they began to suffer massive losses. So, given this history, it is reasonable to ask: Did the two GSEs forget the lessons of the past? Are they about to suffer those massive losses again?
News & Events
Policy Breakfast: Measuring the Success of Housing Our Neighbors
On Monday, October 3, 2022 NYU Furman Center held a hybrid Policy Breakfast titled Measuring the Success of Housing Our Neighbors. The discussion examined the five-pillar plan entitled Housing Our Neighbors, which the Adams Administration released earlier this Spring to address New York City’s affordable housing and homelessness crisis. Panelists discussed how to evaluate progress towards the city’s housing goals, and the factors and data that can be used for guidance.
The Latest GSE Stress Test Results: Showcasing the Need for Regulatory Capital Revision (Part 2)
On August 11, the Federal Housing Finance Agency (FHFA), the regulator and conservator of Freddie Mac and Fannie Mae, the two government-sponsored enterprises (GSEs), released the latest annual regulatory stress test results for the two firms, based upon their yearend 2021 financial statements. This is the ninth year of the legally-mandated test, which has at its core the “severe adverse” economic scenario produced by the Federal Reserve. This second of a two-part series shows how the stress test result—i.e., a $4.5 billion loss for the two GSEs combined—is consistent with a level of required capital for the GSEs that is conservatively calculated to be in the $120-135 billion range.
The Latest GSE Stress Test Results: Confirming a Major De-risking Success (Part 1)
On August 11, the Federal Housing Finance Agency (FHFA), the regulator and conservator of Freddie Mac and Fannie Mae, the two government-sponsored enterprises (GSEs), released the latest annual stress test results for the two firms. This is the ninth year for the GSEs to be subject to the legally-mandated test, which reflects the “severe adverse” economic scenario produced by the Federal Reserve being applied to the companies’ year-end 2021 financial statements.
Research & Policy
When Will Government Control of Fannie Mae and Freddie Mac End? (Part 2)
Part 1 of this series described how when the GSEs were put into conservatorship under the Bush administration, the prevailing view was that fundamental reform of their operations was a necessary prerequisite to ending government control. Part 2 addresses two related issues how much longer can we expect government control to last, and what are the most important steps that can be taken in the near term to prepare the companies for an exit to happen as expeditiously as possible, once the FHFA and Treasury decide to go ahead.