Since the enactment of a regulatory regime for Fannie Mae and Freddie Mac, their regulator has had only the powers of a conservator. This ordinarily means that the regulator could take control of the two GSEs under certain circumstances, but couldn't--as a receiver could--marshal their assets, pay off their creditors,...

Because two disparate clients demand loyalty from Fannie Mae and Freddie Mac, these government-sponsored entities must fulfill two ultimately irreconcilable roles.

Banks are among the most heavily regulated institutions in today’s economy. Bank regulation, which seems both normal and immutable, is based on historical antecedents and current policy. The original advantages of a bank charter, such as insulation from competition and a role in the issuance of currency, have been eliminated...

Congress should act soon to protect U.S. taxpayers from the risk of GSE insolvency.