He did not say “might” fail. He said, they will fail in the next housing downturn. This is in the wake of the Supreme Court Decision that the FHFA was unconstitutional as presently composed, giving the Administration the right to fire the director. It was also bad news for the hedge funds holding Fannie and Freddie stock, hoping to profit on their re-privatization.
Here’s Mark Calabria’s statement:
I respect the Supreme Court’s decision and the authority of the President to remove the Federal Housing Finance Agency Director.
It has been the honor of a lifetime to serve as Director of the Federal Housing Finance Agency alongside world-class staff. During my tenure, FHFA has fulfilled its mission as the economy fluctuated from record-low unemployment and a strong housing market, to a pandemic-triggered recession that spared house prices but contracted supply. Through this cycle, FHFA has acted quickly and effectively to provide relief to homeowners and renters impacted by the COVID-19 pandemic, and to ensure Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System operate in a safe and sound manner, all while supporting historic growth in homeownership, especially among minority households.
However, much work remains. When the housing markets experience a significant downturn, Fannie Mae and Freddie Mac will fail at their current capital levels. I wish my successor all the best in fixing the remaining flaws of the housing finance system in order to preserve homeownership opportunities for all Americans.