Richard Cooperstein's opinion article, "Opinion: Why we should regulate GSEs as public utilities" was featured in HousingWire
In June 2021, the Supreme Court of the United States ruled that President Joe Biden had the authority to oust the head of the Federal Housing Finance Agency (or FHFA), which oversees the government-sponsored enterprises (or GSEs) Fannie Mae and Freddie Mac. And within hours, he did just that, moving Trump-appointed Mark Calabria from the seat and instating Sandra Thompson in his stead.
The move was widely seen as a necessary step in giving the Biden administration more control over Fannie Mae and Freddie Mac, which have been in conservatorship under FHFA since the U.S. housing market crashed in 2008. It’s also a sign to revive the conversation around GSE reform — namely, whether we should regulate GSEs as public utilities.
During his two-year tenure, Calabria emphasized releasing Fannie Mae and Freddie Mac from conservatorship, severing their federal connection, and reducing their market relevance and presence. However, this approach depends on assumptions of perfect markets and fair lending, which are not automatic.
So far, it appears the Biden administration understands this. Nevertheless, formalizing a privately owned and publicly regulated utility requires congressional legislation, which depends on bipartisan political cooperation. Short of legislation that might not pass, GSEs should be regulated — and therefore, run — as utilities.