After 'Sleeping on' the GSE 'Plan,' a Few Thoughts

For some in the mortgage industry it was a long weekend — long in the sense they had 48 hours to contemplate the end of Fannie Mae and Freddie Mac. But now that it's Monday morning, cooler heads are prevailing. Some folks even think Fannie and Freddie might survive, not in present form mind you, but as one combined entity that is much smaller and only exists to issue guarantees. (Maybe this entity would have a much smaller portfolio. We shall see.) In a week or so we'll get a look at the two GSE's 4Q results. No one expects them to turn a true profit because they are paying the Treasury a 10% dividend. But take away that dividend and maybe they can earn money. And if they do turn an "operating" profit, perhaps the debate will change quickly…