Billionaire investor Bill Ackman publicly supports the merger of Fannie Mae and Freddie Mac, sharing Rossi's insights on the need for efficiency. Rossi asserts that the two government-sponsored enterprises (GSEs) have become almost identical in their products and services, leaving price as their only competitive factor. This price-focused competition eroded capital and contributed to the global financial crisis, resulting in the GSEs being placed under government control. He believes that merging the enterprises could streamline operations and reduce combined administrative costs of $6.5 billion while maintaining their core business lines.
Rossi describes the competition between GSEs as unhealthy, stating that their focus on price competition eroded capital leading to their government's control after the financial crisis.
Rossi believes merging Fannie Mae and Freddie Mac would create efficiency gains, as both companies have the same structure and combined administrative expenses are currently $6.5 billion.
The relentless competition for market share among large lenders caused guarantee fees to be set at levels that did not accurately reflect the actual credit risk taken on by GSEs.
Rossi suggests that having entities competing solely on price is not logical since they function more like large financial market utilities rather than competitive businesses.
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