The U.S. Treasury Department reportedly held talks with Houlihan Lokey Inc. to advise it on possible reforms to Fannie Mae and Freddie Mac, Bloomberg News reported, citing a source.
Bloomberg clarified that the investment bank has not been formally hired. Houlihan Lokey has advised on several high-profile bankruptcy cases, including Enron Corp. and Lehman Brothers Holdings Inc.
People familiar with the matter told the news service that the Trump administration is expected to release its blueprint to return the two government-sponsored enterprises to the private sector and release them from conservatorship Sept. 5. Two sources said the proposal will allow rival firms to compete with Fannie and Freddie.
A Treasury Department spokesperson denied that there were any talks to hire Houlihan Lokey as an adviser, while the company did not respond to a request for comment.
Fannie Mae and Freddie Mac were created by Congress with the aim to ensure sufficient liquidity in the housing market. The GSEs were taken into conservatorship by the Treasury in 2008 and bailed out with about $191.5 billion in taxpayer funds, according to Bloomberg.
The White House in March said it would release a blueprint for the GSEs to be taken out of conservatorship and that it would work with Congress to pass the plan. Senate Banking Committee Chairman Mike Crapo, R-Idaho, in February released his own plan to reform Fannie and Freddie. The proposal would stop any bailouts to the GSEs and direct the Federal Housing Administration to give stress tests and required capital ratios to the GSEs, among other things.
