As part of the ongoing effort to remove Fannie Mae and Freddie Mac from government conservatorship, FHFA and the Treasury Department last night announced that it would allow the GSEs to retain earnings until they meet the capital requirements established in the 2020 GSE capital rule.

Treasury also said that Fannie and Freddie may raise private capital and leave conservatorship once certain conditions are met.

In letter agreements with each GSE, FHFA and Treasury said that they would work 'to restructure Treasury's investment and dividend in a manner that facilitates the orderly exist from conservatorship, ensures Treasury is appropriately compensated, and permits the enterprise[s]to raise third-party capital as appropriate,' and that they should aim to put a proposal before Congress addressing these matters prior to Sept. 30.

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