A conservatorship is supposed to be a temporary thing, but we're now running on six-and-a-half years since Fannie Mae and Freddie Mac collapsed – it’s time to get something going.

Everyone has their preferred route out, because no one wants to return to the way things were, nor do they want to keep things as they are now.

So Mark Calabria and Alex Pollock have come up with seven steps they say could chart a course out of conservatorship.

We’ll give you two, but you need to click through to get the other five.

  1. Take away Fannie and Freddie’s capital arbitrage and set their equity capital requirements in line with other financial institutions of similar size. Equity of at least 5% of total assets should be their required leverage capital ratio. This is the minimum for all big bank holding companies — for Fannie and Freddie it should absolutely not be less. Given their undiversified business, something more might be prudent. In any case, the hyper-leverage which allowed Fannie and Freddie to put the whole financial system at risk needs to be permanently ended. 
     
  2.  End all their securities law exemptions. Subject them to the 1933 and 1934 Securities Act requirements like all other companies with public securities. Other provisions of our securities laws that treat Fannie and Freddie securities as the equivalent of government debt should also be repealed.

Read the other five and the full article here.