To a large extent, the fate of Fannie and Freddie, and the future of housing finance, is being shaped by so-called experts who seem unwilling to acknowledge certain irrefutable facts. These facts include the following:

1. GSE loan performance has always been exponentially superior to anyone else's.



2. The GSEs continually maintained robust liquidity throughout 2008, right up until the date they were taken over by the government on September 6, 2008.

3. The GSEs were adequately capitalized on the date they were taken over by the government, according to the testimony of their regulator, James Lockhart.

4. The GSEs liquefied the mortgage markets after all other private players turned off the credit spigot in 2007.

5. The GSEs were able to service all maturing debt from ongoing operations before and after the government takeover.

6. The GSEs never needed a government bailout to fund a cash shortfall or operating expenses.

7. The GSEs' non-cash accounting losses for fiscal years 2008-2011, which necessitated draws of taxpayer funds, were entirely reversed during fiscal years 2012-2013.

8. FHFA operates under a statutory regime that requires it to support the ongoing financial health of the GSEs. It has no legal authority to do or pursue anything else.

9. There is no legal precedent that authorizes a conservator of an undercapitalized financial institution to pay cash dividends.

10. The Third Amendment sweep to the Senior Preferred Stock Purchase Agreement, which drains the GSEs of all earnings and equity now and forever in the future, is without legal precedent.

11. Proponents of any type of reform to replace the GSEs offer zero empirical evidence that their proposals have ever worked in the past.

12. Proponents of reform to replace the GSEs offer zero hard evidence that their proposals offer any improvement over the ex ante GSE model in terms of: loan performance, risk diversification, or liquefying the mortgage markets during a cyclical downturn.

13. The liquidity crises that defined the 2008 financial crisis (at AIG, Lehman, Bear Sterns, etc.) were all caused by risk exposures to private label mortgage securitizations. 

14. Moreover, no financial institution or market ever faced any liquidity problems tied to any risk exposure to Fannie or Freddie.

15. FHFA insists that its actions with regard to Fannie and Freddie are exempt from judicial review.

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