Ending months of suspense, on February 11, 2011, the Department of the Treasury and the Department of Housing and Urban Development issued a report to Congress unveiling the Obama Administration’s plans for the two giant, government-sponsored secondary mortgage market entities (the “GSEs”), Fannie Mae and Freddie Mac, and for the future of the U.S. housing finance system generally (the “Proposal”).

Action to reform the housing and mortgage finance markets cannot come too soon. Despite a widespread political and public consensus that the GSEs, currently bankrupt wards of the State, have grown far too large in size and influence—a sentiment reinforced by a taxpayer bailout of at least $135 billion to date—the GSEs occupy an ever increasing share of the residential mortgage market. More than 90% of all new U.S. residential mortgage originations are purchased, guaranteed, or insured by the federal government, with the GSEs alone purchasing at least 70% of residential originations. Turning the fully laden GSE ship in mid-course is one of the most daunting tasks currently facing the government, but is considered by many to be an essential stepping stone to restoring a healthy housing market in the aftermath of the financial crisis.