Eight years after Congress placed Fannie Mae and Freddie Mac into conservatorship, their long-term future and that of the housing finance system appear no clearer.

Yet most everyone agrees about the importance of returning private capital to the mortgage market, regardless of what happens to the two government-sponsored enterprises. Lately, policymakers have supported using expanded risk-sharing as a way for Fannie and Freddie to raise more private capital. But using risk-sharing alone without more equity is not the best approach for ensuring the safety of the mortgage finance system.

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