GOLDMAN: Here's Why Fannie And Freddie Won't Get Overhauled Anytime Soon

Earlier this week, shares of Fannie Mae and Freddie Mac cratered on the announcement that Senate Banking Committee leaders had reached a bipartisan deal to replace the government-sponsored mortgage giants with a new entity.

The two stocks - whose dividends go to the Treasury Department and not shareholders - had been a favorite of many hedge fund managers betting that eventually shareholders would win out in court before the government could pass an overhaul.

Investors in Fannie and Freddie may be pleased to read this assessment from Goldman Sachs' Alec Phillips. He argues that, while the issue is indeed moving forward, reform will not be enacted this year.

The key reason, Phillips writes, is that Congress really has no deadline here. Today's members of Congress only really act if they are up against the clock. From the note:

There is no hard deadline for action. The main obstacle to reform in the near term is simply that there is no action-forcing event. Almost every major piece of legislation enacted since control of Congress became divided in 2011 has been motivated by a deadline. Since the Treasury's capital agreement with the GSEs is open-ended--and the GSEs are profitable in any case--there is no obvious event that will force Congress to intervene. One potential catalyst for legislative action would be a final ruling on lawsuits brought by GSE shareholders regarding the Treasury's handling of the GSEs over the last few years. A ruling that restored the GSE's ability to retain profits--and eventually repurchase the Treasury's stake in the companies--might prompt Congress to act, but the outlook and timing for any such decision is very unclear.

"So while we expect to hear much more about GSE reform over the next few months, we would be surprised to see reform legislation reach the President's desk this year," he concludes. "That said, over the longer term we believe GSE reform has a reasonable chance of enactment."