Government-seized mortgage companies Fannie Mae and Freddie Mac have been in Republicans' cross-hairs for some time. Last month, however, we learned that the Treasury also has plans for winding down the entities. This week, House Republican Conference Chairman Jeb Hensarling re-introduced legislation to shutter the firms. In some sense, it's not far off from what the Treasury plans. The differences mostly involve timing.
First, let's talk about the similarities. Both plans intend to wind down Fannie and Freddie. They each hope to do so by increasing guarantee fees and lowering the size of mortgages that they can back. They also both want to end the companies' affordable housing goals. The two plans also agree that the size of the companies' portfolios should shrink gradually.
So where don't Republicans and the Treasury line up? The general principles may be the same, but the details differ mostly along timing. The Treasury's plan appears to allow this process to take around ten years. The Republicans hope to end the firms' conservatorship in just two years and to be completely privatized within five years.
Really, these two plans aren't that far apart. They both agree on the general path that Fannie and Freddie must take, but which timing makes more sense? It depends in part on how the housing market stabilizes and how the quickly private market responds to taking on additional mortgage funding risk.