One of the chief considerations in reforming the government-sponsored enterprises Fannie Mae and Freddie Mac is the need for capital. As long as the GSEs exist, they must have adequate capital so taxpayers will never again be compelled to help them meet their financial obligations. If the GSEs were shut down, there would have to be adequate pools of private-sector capital to ensure continued stability and liquidity in the mortgage market.

The latest entrant in the GSE reform debate addresses these issues and deserves serious consideration by policymakers. “Blueprint for Restoring Safety and Soundness to the GSEs” — created by Moelis & Co. — lays out a feasible way to raise upward of $180 billion and establish strong regulatory standards so that Fannie and Freddie will never again require a taxpayer-funded bailout.

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