So, What Does the White House Really Want to do with the GSEs?

Anyone looking for Treasury Secretary Tim Geithner to endorse a specific approach to the future of Fannie Mae and Freddie Mac (and the housing finance system at large) came away disappointed by his testimony before the House Financial Services Committee on Tuesday — where he repeatedly declined to take a concrete stand. But there's probably a reason for this. Fannie and Freddie are a conundrum. Both recently turned profitable on an operating basis, but have to pay Treasury (Geithner's employer) a 10% dividend each quarter. In other words, Treasury is charging the GSEs the same rate for credit that hard money lenders are charging poor Schmoes in the private sector. And here's another strange twist to the story: the White House would love to see the housing market revive but it won't happen if the FDIC gets its way and the 'Qualified Residential Mortgage' definition is written with a 20% downpayment. We are no longer in Kansas…