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  • Comment Detail

  • Date: 05/17/23
    First Name: Familee
    Last Name: Mang
    Email: famileemang@gmail.com
    Organization Type: N/A
    Organization: FamilyMang1 LLC

  • Comment

    This request for input allows stakeholders to address the bigger issue at hand, which is the housing affordability crisis plaguing the country today. Solve this issue and all other issues will resolve themselves.

    I believe this administrative (FHFA working together with US Treasury) can unilaterally generate ~$250b in funding to solve the housing affordability crisis!

    The Problem:

    1) USA is experiencing an all-time housing affordability crisis.

    2) Post-midterms, the current administration and Democrats can no longer pass any legislation that involves large amounts of spending to address this crisis.

    The Solution:

    1) 2 bills totaling ~$250b were proposed to address the housing crisis but fell short of becoming law:

    a) $150b via "Build Back Better Act" (https://tinyurl.com/5n7ewthr)

    b) $100b via "Downpayment Toward Equity Act" (https://tinyurl.com/yc24uznf)

    But how do we overcome problem #2?

    2) The Biden admin can unilaterally (via the Treasury and FHFA) monetize its stake in GSEs that is conservatively worth ~$250b and direct the proceeds towards a housing fund addressing the crisis.

    Supplemental info:

    This idea was originally proposed by the Brookings Institute (https://tinyurl.com/yreshf7j) and received consensus support by affordable housing advocates (https://tinyurl.com/yvye4dha).

    While the plan remains instructive today, its coming up on 2 years so the numbers are stale and need to be updated, It claimed up to ~$100b in value, which in reality is closer to ~$250b today.

    How? The GSEs have been able to retain ~$100b in earnings to date while the governments preferred stake has increased.

    The government can now convert it’s preferred stake into common shares to retain 90%+ equity interest in the GSEs.

    The 90%+ equity interest is conservatively worth ~$250b (~$27.5b annual net income x a conservative market multiple of 10x P/E).

    The government can then monetize its stake via a series of secondary offerings over time as the GSEs exit their 15+ year conservatorship.

    There's precedent, the government followed this exact playbook with AIG when it converted its preferred stake to 92% equity interest in common shares which it proceeded to monetize via secondaries over time (https://tinyurl.com/5n7j7zs3).