The GSEs are on their way to paying back the money they owed the government under the original bailout deal made at the height of the financial crisis, making 2018 an opportune time for an overhaul of the housing finance market.
The Federal Housing Finance Agency must set fees equal to the cost of capital that private banks hold against similar risk, not just the amount of capital that Fannie and Freddie think are right for themselves.
Under Rep. Jeb Hensarlings proposed legislation, some banks might raise capital levels to get regulatory relief. Others might choose to grin and bear the current level of micromanagement. The result would be a more diverse banking sector.