Investors have provided Fannie and Freddie with a powerful vehicle for achieving profits that are virtually guaranteed through the rapid growth of their balance sheets, and the resultant scale has given them an advantage that their potential private-sector competitors cannot meet.
I think everyone agrees that the framework passed the test successfully; however, some issues related to the framework’s functioning in the medium term – namely, its efficiency and transparency – have been revealed. As the EU-level discussions on possible minimum harmonization of borrower-based measures are currently ongoing, now is a perfect time to evaluate the role borrower-based measures played during the pandemic.