"Large financial institutions need to have more capital," say many policymakers in Washington. But in the case of Fannie Mae and Freddie Mac, this statement is not so simple. With these two institutions sitting in conservatorship, the type of capital and where it comes from matters. On this point, there is quite a bit of dangerous misinformation.
First, some fundamentals. Fannie and Freddie have capital today. Lots of it – $256 billion, in fact. This does not change in 2018, as some have argued. They will absolutely still have this capital.