Executive Summary 

• The Federal Housing Finance Agency (FHFA) supervises and regulates the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac while also exercising broad corporate powers as their conservator, creating a longstanding question over when an enterprise directive constitutes corporate governance and when it is federal regulation subject to the Administrative Procedure Act. 

• William Pulte’s service as both FHFA director and chairman of both enterprise boards raises a separate statutory issue while further blurring the distinction between FHFA’s regulatory and conservatorship roles. 

• Nearly two decades into conservatorship, FHFA’s increasing use of enterprise governance to implement consequential housing policies raises a basic question: How far can conservatorship authority extend before it becomes a substitute for regulation? 

Introduction 

Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have been in federal conservatorship since September 6, 2008. What began as an extraordinary intervention during the financial crisis has become a durable feature of the U.S. housing-finance system. During that period, the Federal Housing Finance Agency (FHFA) has occupied an unusual position, functioning simultaneously as the GSE’s federal regulator and as their conservator, with authority over the powers ordinarily exercised by shareholders, boards, and management. 

Courts have recognized the breadth of FHFA’s authority as conservator. The more difficult question is how that authority operates when a GSE directive has consequences extending beyond the corporation itself. An enterprise decision can affect mortgage lenders, borrowers, and the broader secondary mortgage market without necessarily becoming a federal regulation. The legal issue is therefore not simply the extent of the policy’s effects, but the statutory authority under which FHFA acts. 

William Pulte’s tenure has brought that question into sharper focus. Since becoming FHFA Director in March 2025, Pulte has also served as chairman of both GSE boards. The federal official responsible for regulating Fannie Mae and Freddie Mac is therefore also occupying the principal corporate-governance position through which FHFA exercises its conservatorship powers. 

That arrangement raises a separate statutory issue. Section 4512(g)(2) of the U.S. Code provides that the FHFA director may not hold “any office, position, or employment” in a regulated entity or entity-affiliated party. The interaction between that prohibition and FHFA’s authority to exercise the powers of an enterprise’s board while acting as conservator presents a question of statutory interpretation that has not been conclusively resolved. 

These questions matter because the GSEs remain central to the secondary mortgage market. Policies concerning underwriting, loan eligibility, pricing, servicing, and credit requirements can materially influence how mortgages are originated and financed. The fact that such policies originate within the enterprises, however, does not by itself determine their legal character. 

The Statutory Distinction 

The Housing and Economic Recovery Act (HERA) gives FHFA unusually broad powers as conservator. The agency may exercise the rights and powers of the GSEs’ shareholders, officers, and directors; operate the enterprises; and take actions necessary to put them in a sound and solvent condition or otherwise preserve their assets. Congress separately authorized FHFA to regulate the GSEs and to prescribe regulations concerning the conduct of conservatorships and receiverships. 

That distinction matters under the Administrative Procedure Act (APA). Federal regulatory actions may be subject to procedural requirements, including notice and comment where applicable. Actions FHFA takes within its statutory capacity as conservator are treated differently, including because HERA §4617(f) sharply limits judicial intervention in actions taken within that authority. 

Conservatorship necessarily requires FHFA to make decisions that would ordinarily belong to corporate management or a board. The fact that those decisions affect the broader mortgage market does not, standing alone, transform them into federal regulations. 

The more difficult cases arise when an enterprise policy begins to function as a substantive requirement for participants throughout the mortgage market. Fannie Mae and Freddie Mac’s decisions about which mortgages they will purchase, the terms on which they will purchase them, and the standards they impose on lenders can materially influence market behavior. But an enterprise requirement applicable to its counterparties is not necessarily equivalent to an agency rule applicable to regulated entities or market participants generally. 

The key question is therefore the source of legal authority. A policy governing how an enterprise conducts its own business is different from an agency action purporting to establish a generally applicable regulatory requirement, even when the practical consequences overlap. 

What the Courts and GAO Have Established 

Collins v. Yellen confirmed the breadth of FHFA’s conservatorship powers. The Supreme Court recognized that FHFA may exercise the GSEs’ corporate powers while acting as conservator. At the same time, HERA’s protection against judicial interference applies to actions taken within FHFA’s statutory authority; it does not give FHFA unlimited power to act beyond the authority Congress granted. 

Lower courts have similarly rejected challenges seeking to characterize FHFA conservatorship directives as unlawful exercises of regulatory authority. In Town of Babylon v. FHFA, the Second Circuit upheld FHFA’s direction that the GSEs stop purchasing mortgages secured by properties subject to certain clean energy assessments. The Ninth Circuit reached a similar conclusion in County of Sonoma v. FHFA. Those decisions underscore the importance of HERA §4617(f) and the statutory authority FHFA is exercising when it acts as conservator. 

The United States Government Accountability Office (GAO)’s 2024 decisions concerning GSE pricing and credit reporting point in the same direction, although their scope should not be overstated. In March 2024, GAO considered FHFA-directed changes to the GSEs’ single-family pricing framework and concluded that FHFA had acted as conservator rather than as an agency for purposes of the Congressional Review Act. In October 2024, GAO reached a similar conclusion concerning FHFA’s direction that the GSEs replace their traditional “tri-merge” credit-reporting requirement with a “bi-merge” approach (under which three credit reports would be replaced by two, potentially reducing costs but limiting the breadth of credit information available). 

Those decisions make it difficult to argue categorically that an enterprise policy with significant market consequences must undergo notice and comment. They do not, however, resolve every APA question. The GAO decisions concerned the Congressional Review Act and whether the enterprise-directed actions constituted “rules” under that statute. They were not judicial decisions establishing a general rule governing APA notice-and-comment requirements for all FHFA conservatorship actions. 

The GAO decisions also do not establish the opposite proposition: that FHFA can convert any regulatory policy into a corporate decision simply by directing an enterprise to implement it through conservatorship. The harder question is whether the label of conservatorship can determine the legal character of an action when FHFA is using corporate authority to pursue a policy objective that otherwise could have been implemented through regulation. 

Pulte and the Dual Role 

Pulte’s position makes that question particularly consequential. At the outset of conservatorship in 2008, FHFA assumed the powers of the GSEs’ boards and management while establishing new boards with separate non-executive chairmen. Pulte instead joined the boards of both GSEs and became chairman of both. 

That arrangement presents a distinct statutory question. Section 4512(g)(2) provides that the FHFA director may not hold “any office, position, or employment” in a regulated entity or entity-affiliated party. Fannie Mae and Freddie Mac are regulated entities under HERA. FHFA regulations have also addressed the independence of GSE board chairmen from FHFA. 

The precise interaction between those provisions and FHFA’s conservatorship authority has not been conclusively resolved. The conservatorship provisions give FHFA extraordinary control over the GSEs, while §4512(g)(2) places a statutory restriction on the director’s positions outside the agency. The question is therefore not simply whether Pulte’s appointments are consistent with ordinary corporate-governance practice, but how the two provisions should be reconciled. 

That distinction is important to the broader administrative-law issue. When the FHFA director is simultaneously serving as chairman of both GSE boards, the separation between FHFA’s regulatory function and its exercise of corporate authority becomes less visible institutionally, even though the underlying statutory authorities remain distinct. 

It does not follow that every decision made through Pulte’s board positions is regulatory action. It does, however, make the legal source of a particular decision more important, particularly when the decision has consequences beyond the enterprises themselves. 

Regulatory Authority and Conservatorship Authority 

FHFA can influence enterprise policy through two different forms of statutory authority. As regulator, it can act through the regulatory powers Congress assigned to the agency. As conservator, it can exercise the corporate powers of the enterprises themselves. 

That distinction becomes difficult when the same policy objective could potentially be accomplished through either mechanism. An enterprise may change a business practice through ordinary corporate decision-making, while FHFA could in other circumstances seek to establish a requirement through regulation. The practical result may be similar, but the legal authority and procedural requirements can differ. 

Existing precedent makes it difficult to argue that every consequential enterprise decision requires notice and comment. At the same time, the breadth of conservatorship authority does not eliminate the need to identify the statutory source of the particular action being challenged. 

The question is especially important where FHFA uses its control over the GSEs to advance a policy objective affecting the wider mortgage market. The GSEs’ importance gives their decisions substantial practical reach, but market impact alone does not answer the legal question. 

A Conservatorship That Became Permanent 

The need for clarity on notice and comment has become more significant because the conservatorships have lasted more than 18 years. Fannie Mae and Freddie Mac entered conservatorship on September 6, 2008, and remain under FHFA’s control, with the agency continuing to exercise the powers of their management, boards, and shareholders. 

The duration does not itself change FHFA’s statutory authority or diminish the precedent recognizing the breadth of its conservatorship powers. It does, however, change the institutional context in which those powers are exercised. 

A conservator managing a distressed company during a financial crisis necessarily makes decisions that would otherwise belong to management or a board. FHFA’s continued exercise of those powers over two institutions central to the secondary mortgage market is a substantially more durable form of corporate governance. 

That matters because Fannie Mae and Freddie Mac remain central to mortgage finance. Their business decisions can influence mortgage credit, lender behavior, and the allocation of risk between private-market participants and the federal government. The continued use of conservatorship is therefore not simply a question of how two companies are managed; it also affects how housing-finance policy is implemented. 

The statutory purpose of conservatorship for the GSEs is to preserve and conserve their assets and property while restoring their safety and soundness and placing them in a sound and solvent condition. Conservatorship provides a framework for stabilizing a distressed GSE and addressing its financial and operational deficiencies, potentially as a transitional step toward either receivership and an orderly wind-down or a return to independent operations.  

The statute does not, however, prescribe either outcome as the necessary endpoint of conservatorship; rather, it gives the FHFA broad authority to reorganize, rehabilitate, or wind up a GSE’s affairs, with receivership and liquidation governed by separate statutory provisions. Nonetheless, it is not clear that this FHFA director (or ones before him) has prioritized these goals as conservator, instead using them and the position as a tool of executive power. 

The longer the conservatorships continue, the more important it becomes to distinguish crisis management from the establishment of long-term policy. Congress gave FHFA both a regulatory mission and extraordinary conservatorship powers. The continued exercise of both functions over the same institutions raises questions about how those powers should operate when conservatorship becomes a durable institutional arrangement—as is now clearly the case. 

The conservatorships therefore remain formally subject to termination but have proved extraordinarily durable in practice. That persistence makes the limits and legal character of FHFA’s continuing use of conservatorship authority increasingly consequential. 

Conclusion 

FHFA plainly has broad authority as conservator, and existing precedent recognizes that the agency may use that authority to make consequential decisions for Fannie Mae and Freddie Mac without every such decision becoming an APA rule. Collins, Town of Babylon, County of Sonoma, and GAO’s analysis of the bi-merge directive all support substantial latitude for FHFA when it is exercising the GSEs’ corporate powers. 

But the real test of FHFA’s dual role is unlikely to come from another abstract debate over whether the conservator has broad powers; Congress already answered that question in 2008, and the courts have largely confirmed it. The more interesting question is what happens when an emergency governance structure becomes the normal way of running two of the country’s most important financial institutions—and when the official running that structure is simultaneously their federal regulator and the chairman of both boards. If conservatorship is going to remain the answer for the foreseeable future, FHFA should eventually have to explain why the extraordinary powers of a conservator should continue to function as an ordinary instrument of housing policy.