Fannie Mae (FNMA)

[brandemarcus]

1. The charges against the real Tim Howard were dropped by the judge.

2. In the worst case, Fannie was accused of pushing earnings forward that would have happened anyway over time. Freddie was accused of smoothing earnings and the restatements actually caused earnings to increase.

3. The "mistakes" had to do with interest rate hedges, not credit losses!
As I pointed out in the 10q's recent statement ,these are much ado about nothing and will reverse over time.


4. The actual effect of these trumped up charges was to reduce gse market share and increase the playing field for private label securities in 2003-2005. This happened to coincide with some of the worst years of sub prime loans.

5. The gse's then tried to make up for their loss of market share by buying some sub prime securities in 2006, 2007 which cost them dearly in mark to market charges in 2008. So ironically the trumped up charges against the Gse's increased the sub prime loans made by Wall street. It also weakened the Gse's in the future.

6. Of course no one forced the gse's to buy sub prime securities in 2005-2006. It was deemed politically necessary to make up for their loss of market share. Wall street was pushing into the gse business by making predatory loans to poor people. Just watch cnbc's excellent documentary made in 2009-House of Cards with David Faber. You will hear right near the beginning the statement that putting Gse's in the penalty box increased our market share from a sub prime lender.


7. To suggest that the" accounting scandals" of 2002-2003 were similar to any problems that happened in 2008 is wrong. The "sick culture" was actually caused by the trumped up charges in 2002 -2003.