The Federal Housing Finance Agency (FHFA) has quietly hired New York-based PricewaterhouseCoopers LLP to create contingency plans for taking the government-sponsored enterprises (GSEs) into receivership.
According to a Bloomberg News report that cites contract documents, the FHFA signed this agreement in May. The agency did not issue a formal press release announcing this contract, and the agreement was not publicly acknowledged until the Washington-based legal organization Judicial Watch filed a Freedom of Information Act (FOIA) request on the status of Fannie Mae and Freddie Mac.
‘Conservatorship is kind of this limbo they've been in since 2008, and receivership would be more aggressive toward liquidating Fannie and Freddie and putting them out of business,’ says Vern McKinley, a financial consultant working on behalf of Judicial Watch. ‘They've never taken any steps in that direction.’
An FHFA spokesperson told Bloomberg News that this contract was part of ‘ordinary regulatory activities’ and that the FHFA had no plans to put the GSEs into receivership, which would entail permanently winding down and selling off their assets.
Fannie Mae and Freddie Mac have been under federal conservatorship since September 2008 and have drawn nearly $190 billion in U.S. Treasury funds to remain operational. The FHFA's contract with PricewaterhouseCoopers LLP requires the consulting firm to ‘recommend guidelines, procedures and other protocols the FHFA should have in place prior to placing any regulated entity into receivership.’
In addition to Fannie Mae and Freddie Mac, the receivership contract covers the 12 Federal Home Loan Banks, which are also under the FHFA's regulatory control.