DeMarco HPC Mission Statement:
https://www.housingpolicycouncil.org/mission
Excerpt:
HPC’s strategic plan covers a limited number of critical issues, including: restoring the private market to expand the level of private capital and introduce effective risk controls into the marketplace; modernizing the government agencies involved in housing finance, such as FHA, to expand each agency’s capacity to fulfill its mission and manage risk; reformulating Fannie Mae and Freddie Mac to remove the public-loss and private-gain model that added substantial risk to the housing finance system; developing a sustainable approach to expanding affordable housing opportunities that will reach historically underserved segments of our population; and cultivating a market environment that encourages and enables responsible innovation.
Jason Thomas Special Advisor to GWB at the NEC March 8, 2008 Memo:
https://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2008-03-08_Treasury_Email_from_Hason_Thomas_to_Robert_Steel_Re_Source_document_for_Barrons_article_on_FNM.pdf
Excerpt:
Government Bailout Is Necessary, Likely, And Potentially Helpful
Fannie Mae is demonstrably a failed social experiment. A realistic assessment of its balance sheet shows
its net worth to be overstated by tens of billions of dollars and the company to be already insolvent.
Even with all its accounting legerdemain, Fannie's losses are an accelerating horror show, with
shareholders losing $1.5 billion in 07Q3 and $3.7 billion in 07Q4. Those losses are just the beginning.
As shareholder capital gets wiped, the government will have no choice but to seize the company and
place it in conservatorship or receivership. Importantly, mortgage-backed security holders guaranteed
by Fannie Mae will see no losses. The government will likely allow debt holders to fare okay, with either
no or token losses, perhaps 1%.
Shareholders, both common and preferred, are likely to be left with nothing. However, these
shareholder losses have already been locked in by the company's credit decisions over the past few
years and cannot be helped. It must be remembered that Fannie is the biggest mortgage risk holder in
the biggest mortgage crisis.
A fully government-owned guarantor of mortgage debt might be exactly what is called for given the
current housing crisis. While various proposals have been floated to expand the FHA to meet this role, it
has neither the infrastructure nor the expertise to address the broader mortgage market. A nationalized
Fannie Mae would be refocused to directly address the various problems of illiquidity, affordability, and
sustainability in the mortgage market. Without the need to satisfy a fiduciary duty to shareholders,
Fannie might finally be able to perform its affordable housing mission in a helpful and proactive manner.
Interesting that the Memo between the UST and NEC in the GWB Admin and DeMarco's Mission Statement are basically saying the same things except before 2008 it was a " failed social experiment" and now a structure where there is public loss and private gain.
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