In the Summer of 2018, the White House released a proposal to “fully privatize the GSEs” (Fannie Mae and Freddie Mac.) Twenty-one months later, little has happened. Why? It’s complicated — that’s why.

Prior to the 2008 financial crisis, Fannie Mae and Freddie Mac were private entities with the implicit backing of the full faith and credit of the United States government. In a conservatorship, the agencies carried an explicit guarantee of the Federal Government.

In developing a model to privatize the GSE’s, the White House and Congress will have to balance various competing interests. Of utmost importance is to maintain the liquidity and stability of the mortgage markets. An explicit guarantee of the mortgage: backed securities issued by the new entity (probably Fannie Mae and Freddie Mac, possibly others) will be required.

At the same time, taxpayers will need to be protected by putting more private capital at risk. Finally, the new entities must somehow assure a level playing field for lenders of all sizes. This transition will require bi-partisan support (remember that?).

Congressional action will be required to (1) change the existing charters of Fannie Mae and Freddie Mac; (2) create the Mortgage Insurance Fund to guarantee the mortgage-backed securities; (3) enact the new explicit guarantee; and (4) create the successor regulator. As we said, it’s complicated.

Up next: Now Premiering: ‘Promise’ Video