The Federal Housing Finance Agency has hired a consulting firm to create contingency plans for taking Fannie Mae, Freddie Mac and the Federal Home Loan Bank system into receivership, according to contract documents.
The plan is part of "ordinary regulatory activities" and does not mean FHFA plans to take any of GSEs into receivership, especially now that all are profitable on an operating basis. (Receivership would involve winding down the GSEs and selling their assets—all $4 trillion worth—in the open market.)
"This planning activity is routine and does not indicate any condition of the current status of the regulated entities," an agency spokeswoman told Bloomberg, which reported the news on Monday.
In May the regulator inked a contract with PricewaterhouseCoopers LLP to "recommend guidelines, procedures and other protocols the FHFA should have in place prior to placing any regulated entity into receivership," according to the proposal.
The proposal says PricewaterhouseCoopers will "develop a framework for the FHFA to use in building the capacity" to liquidate the GSEs.
Fannie and Freddie have been operating under Federal conservatorships since September 2008.
There are no current plans to liquidate the two which provide liquidity to about 70% of the mortgage market.
