Dear FSOC:
“This nonbank designation authority is the centerpiece of Congress’s framework to address the risks,” you say. In this context, please consider which of the following nonbanks create more systemic risk: Fannie Mae, Freddie Mac, or MetLife?
As is more than obvious from actual events, as well as from their size, interconnectedness, and hyper-leverage, Fannie and Freddie are far more systemically risky than MetLife is.
But while you are eager to designate MetLife a SIFI, you do not pursue the same designation for Fannie and Freddie. Why not? It seems that for this glaring intellectual inconsistency, possible alternative explanations are incompetence, pure politics, and hypocrisy.
It seems to me that until you designate Fannie and Freddie as the SIFIs they so obviously are, it is hard to take you seriously, professionally speaking. Until then, to say the least, you lack credibility.
Yours in the hope you will add Fannie and Freddie to your SIFI circle soonest,
Alex Pollock
Resident Fellow
American Enterprise Institute
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