The Securities Industry and Financial Markets Association wants an explicit guarantee and preservation of the to-be-announced MBS market as part of any restructuring of Fannie Mae and Freddie Mac.
In the trade group's comment letter on GSE reform, SIFMA is asking for continued government support for mortgage finance, but does not take a position on whether a government sponsored enterprise is needed at all.
SIFMA said the most efficient form of guarantee could be a government insurance wrap of mortgage-backed securities that stands behind any private sector insurance or other corporate guarantees, serving as a catastrophic backstop. It also wants a smooth transition for GSE securities in any reform, asking that policymakers avoid a division between pre-reform and post-reform markets.
The group wants at least minimum portfolios for operational reasons if GSEs or similar entities exist, noting that one option would be to use the portfolio to manage mortgage rate volatility.
