A report from the Wall Street Journal. "The Trump administration said it would support returning mortgage-finance giants Fannie Mae and Freddie Mac to private hands. 'Our view is that the government footprint has become too big,' Treasury Secretary Steven Mnuchin said in an interview ahead of Thursday’s report. 'There are people in Washington who are happy to leave this the way it is for another 10 or 20 years, and that’s not us. We feel an obligation to try to fix this.'"

"Fannie and Freddie don’t make loans but instead buy them from lenders and package them into securities that are sold to other investors. Figuring out how to refashion the companies remains the largest single piece of unfinished business from the financial crisis."

"It also could be hard to meaningfully shrink the firms’ housing footprint without affecting borrowing costs. The reason: If some mortgages are no longer bought by Fannie and Freddie, they would be bought by private investors who would demand higher interest rates because the loans wouldn’t have government backing. Such backing is enjoyed by Fannie and Freddie."

"'Investors will be much pickier and charge more for the loans they are willing to invest in,' said Jim Parrott a former Obama administration housing adviser who is now an industry consultant. 'That’s not to say we shouldn’t consider reducing the government’s role in places, but we should be honest about its impact.'"

"Treasury included few specifics for shrinking Fannie and Freddie’s footprint in housing, though they suggested that their regulator, the Federal Housing Finance Agency, could limit the amount of multifamily mortgages that they are allowed to purchase. Treasury also said FHFA should reassess whether the companies’ purchases of cash-out refinancings and loans for investment and vacation properties align with the firms’ core mission."

"Trump administration officials say they are compelled to act because the conservatorship was meant to be temporary. They also say the government should cease playing a central role in housing, a massive sector that touches on some 15% of the economy."

From Politico. "Although Treasury outlined recommendations for legislation to overhaul the way the companies operate, it plans to release the companies with or without Congress, which is unlikely to take up comprehensive housing finance reform anytime soon because the issue is so divisive. 'While Treasury prefers legislation, further reform should not and need not wait on Congress,' a senior Treasury official told reporters Thursday."

"That stance is likely to draw protests from lawmakers, including Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio) and other Democrats, who want to ensure that housing affordability is the top priority in any overhaul. Brown, the top-ranking Democrat on the Senate Banking Committee, warned the administration last month not to ignore 'historically underserved' communities. 'Failing to listen to these important voices does a disservice to communities and puts our housing market and taxpayers at risk,' he said."

"Treasury also suggested that Congress replace the companies’ statutory affordable-housing goals — saying 'the goals were a contributing factor to the GSEs’ risk taking and losses in the lead up to the financial crisis' — with a levy to fund affordable housing programs administered by HUD."