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Golferman,
Thanks for this post. This reaffirms why I bought fnma. Great find. Thanks for sharing.
Raindancer1, Sorry. Please copy then paste it. The colon at the end needs to be highlighted.
http://www.canfieldpress.com/cnnmoney-video-interview-of-wells-fargo-ceo:
Thanks for that informative post. More reasons to continue to stay long seem to surface every day now!
Great Post. Thanks for sharing raindancer1. I have a link to an interview with Wells Fargo CEO last Nov. 26, 2012 saying that a Fannie and Freddie are important for housing.
http://www.canfieldpress.com/cnnmoney-video-interview-of-wells-fargo-ceo:
Always Wondering I know that is old information; however, it is the only blueprint that I could find to explain what happened the last time a GSE was wound down as many folks are wondering about what a GSE wind down is. It is clear based on the Sallie Mae wind down that common shareholders did benefit. if you are looking for the official Lessons learned document then it can be found at treasury.gov. Demarco recently has proposed a securitization platform that is jointly owned by Fannie and Freddie Please see http://online.wsj.com/article/SB10001424127887323494504578340734170819440.html.
This sounds remarkable like a joint venture. imo
This is the platform that Sen. Corker is apparently working on proposing a bill the emulate. There are
over 20 bills on what to do with the GSE's and to date they are only just bills. Congress (as you know) is having a hard time agreeing on anything. I'm thinking that as more letters pour into Congress, more petitions are signed and more shareholders voice their opinion as evidenced by Ralph Nader http://www.thestreet.mobi/story/11933525/1/ralph-nader-wounded-shareholder-of-fannie-mae-freddie-mac.html?cm_ven=GOOGLEN that Congress will respect what the common shareholders have to say.
The GSE's are necessary entities to provide liquidity to the housing market. Their is simply not enough private capital to handle that 5 trillion as evidenced by the Fed Reserve buying all those MBS's and not being able to sell them all http://blogs.barrons.com/incomeinvesting/2013/05/23/agency-mortgage-bonds-mortgage-reits-try-to-stop-fed-fueled-slide/?mod=google_news_blog, the last Senate Housing and Banking Hearing committee testimony http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=84e2b12b-b35c-4197-b2ad-7160d9973ccb, as well as National REaltors http://www.inman.com/2013/05/15/realtors-in-a-defensive-position-on-capitol-hill/ GLTU
Jdmoney thanks for sharing your DD! I've signed the petition!
No problem. Thanks. Just trying to do my part and contribute good information.
Red XIII This is what a GSE wind down is.
This is what occurred when a GSE was wound down.
Please read
http://www.treasury.gov/about/organizational-structure/offices/Documents/SallieMaePrivatizationReport.pdf
Great news. Thanks for this post. It just proves the need for the GSE's even more when they can't sell their MBS to private companies.
Obiteridctum, Thanks for the post and link. I appreciate folks who contribute solid information on this board.
Thanks for the comment and posting the links. I agree and I'm anticipating positive news for the shareholders by end of this year.
Thank you. I definitely agree with you. The AIG shareholders recently sued the government in March and won.
http://www.cnbc.com/id/100544872
Should be similar to AIG common stock. Please read
http://www.politifact.com/truth-o-meter/statements/2013/jan/02/american-international-group/aig-says-it-has-repaid-government-plus-profit/
The government should let them out of conservatorship once the remainder of the bailout money is returned. FHFA states that "A conservatorship is the legal process in which a person or entity is appointed to establish control and oversight of a Company to put
it in a sound and solvent condition." fannie will prove that they are solvent when the bailout funs are all paid back which could happen as early as the end of the year. This depends on a few lawsuits and their profitability the next few quarters. FHFA states
"When will the conservatorship period end?
A: Upon the Director’s determination that the Conservator’s plan to
restore the Company to a safe and solvent condition has been comple
ted successfully, the Director will issue an order terminating the conservatorship. At present, there is no exact time frame that can
be given as to when this conservatorship may end. " IMO and many others the conservatorship should end once the bailout funds are completely sent to the Treasury. It is widely suspected that it would be a Fifth Amendment violation if the gov't continues to hold F&F it's very similiar to what happened with AIG. Shareholders are entitled to just compensation.
Next point the gov't stated that they want wind down F&F because they do not want taxpayers to be on the hook. The problem is that nearly every expert testifying on the Hill has said that F&F needs a gov't backstop. The current FHFA plan implemented by DeMarco is to create a joint entity owned by both F&F something called a Common Securitization Platform. This sounds just like a joint venture to me which means shareholders are good. This board has a ton of links that point to this. Good Luck
Senate Banking, Housing Subcommittee Hearing on bring private capital to mortgage market and gse reform for those who are interested.
See Link http://www.senate.gov/isvp/?type=live&comm=banking&filename=banking051413
Realtors in a ‘defensive position’ on Capitol Hill
Mortgage interest deduction, other homeowner tax breaks are all 'on the table'
Andrea V. Brambila
May 15, 2013
WASHINGTON — An army of Realtors got their marching orders this morning at a federal priority issues briefing at the National Association of Realtors’ Midyear Legislative Meetings and Trade Expo.
Three issues topped the trade group’s agenda: preserve real estate-related tax deductions in the face of calls for tax reform; leave the Federal Housing Administration alone to recover; and restructure Fannie Mae and Freddie Mac in a way that encourages the return of private capital to the secondary mortgage market.
Both chambers of Congress have seen double-digit turnover rates in recent years. Thus, Realtors will need to educate members of Congress about why housing is important and turn members’ attention to what homeownership does for communities, said Jerry Giovaniello, NAR’s government affairs senior vice president.
“The path to recovery runs through our front door,” he said.
In contrast to prior years, this year Realtors are not pushing Congress to support particular legislation, Giovaniello said. Rather, “this year we have to deliver the message ‘we’re watching.’”
Many members of Congress believe lower tax rates are the “holy grail” of economic growth, forgetting that many of their constituents could hurt from losing their major deductions, said Evan Liddiard, NAR’s tax counsel.
He told attendees to urge members to continue to support three main real estate tax provisions: the mortgage interest deduction, the property tax deduction, and the capital gains exclusion for the sale of a principal residence.
No formal comprehensive tax legislation has yet been introduced, but “everything is on the table,” NAR said.
“We’re very much in a defensive posture unfortunately,” Liddiard said.
Giovaniello warned Realtors that Congress members will ask questions to “get you off track,” such as “Who would you tax (instead)?”
“That’s not your job,” he said.
“Our expertise is what these changes would do to the economy and your neighborhood. Don’t go down that other (path),” he added.
Another question might be, “Don’t you want to pay lower tax rates?”
Giovaniello’s response: “Fine, if the rates stay low, but in five years they’re going to go up,” he said.
“You’re never going to get something back that they take away,” he added, referring to eliminating tax deductions.
FHA
FHA has gotten a bad rap on Capitol Hill, according to NAR staffers. Some members of Congress blame the federal mortgage insurer for the foreclosure crisis, despite the agency’s role in keeping the housing market afloat when private lenders fled during the downturn.
“If you lend in a declining market, your risks are going to go up, said NAR policy staffer Megan Booth.
“The problem is if FHA hadn’t been lending between 2007 and 2010, who would have been lending? Nobody. They were the only game in town. If nobody’s lending, housing prices cannot recover.
“So FHA really saved the market during the housing crisis.”
Because of those loans made during the crisis, this year the agency is at risk of needing its first taxpayer bailout in its 79-year history. Although there are currently no bills to radically reform FHA in Congress, some proposals have suggested raising down payment requirements for borrowers, increasing premiums further, boosting credit score requirements, or instituting income limits.
NAR supports none of these proposals. Higher down payments, in particular, would “kill the housing market,” Booth said.
Congress is “completely overreacting” about the possibility of an FHA bailout, she added.
“They (FHA) are doing everything they can do to recoup their financial position. What do (members of Congress) need to do? Absolutely nothing,” she said.
GSE reform
As with FHA, Realtors need to stress the role that government-sponsored enterprises Fannie and Freddie have played in shoring up the housing market, Giovaniello said.
Without Fannie and Freddie to buy up mortgages, there would be no lending, said NAR senior policy staffer Anthony Hutchinson.
Hutchinson does not expect GSE reform to happen this year or next year, but he thinks the issue “is absolutely top of mind” on Capitol Hill.
“They feel like they need to do something. What they need to do, they don’t know, but they feel they need to do something,” Hutchinson said.
What should lobbying Realtors say if members of Congress ask them what to do?
“We need the federal government to have some role in this, explicitly, not implicitly. That’ll make investors feel good and bring more money back into the market. If there’s money in the market, that’ll make consumers feel good,” he said.
The Obama administration has said it supports minimizing the role of government in the secondary mortgage market in order to encourage the return of private capital. But NAR maintains that a government guarantee is crucial to affordable mortgage credit.
“This whole idea that private capital is the only game in town is nuts. There is not enough private capital” to support the housing market, Hutchinson said.
And if mortgages were backed only by private capital, the 30-year fixed-rate mortgage would probably go away, he added.
“Nobody wants to keep a product on their balance sheet for 30 years” — that’s why lenders sell mortgages to Fannie and Freddie, he said.
“Thirty-year fixed-rate mortgages make consumers comfortable. They understand it. They feel good about it,” Hutchinson said.
“If they have to sit there and readjust it every five years or every seven years, that can cause problems — has caused problems — with very exotic (mortgages).”
Here's the link
http://www.inman.com/2013/05/15/realtors-in-a-defensive-position-on-capitol-hill/
Hey Always wondering, Glad to see that we are of a similar mind set. This guy Dr. Michael Lea is scheduled to speak at the Senate next month. He's the former Freddie Mac Chief Economist. Here's a link to a white paper that he wrote on privatizing the GSE's in 2005. I'm hoping that he presents the same info to congress next month. Just an FYI.
http://fic.wharton.upenn.edu/fic/papers/05/0534.pdf
I'm wondering about the sudden advance in price too and that was the only news I could find which could indicate the movement. Hedge fund managers are constantly watching and listening to the senate hearings as this is what will ultimately dictate how high fannie runs. Who knows maybe these hedge fund managers are confident that a new bill to release conservatorship is on the way or at least that they have the ears of a few senators. All I know is that I'm hoping that congress wakes up and realizes that the gse's are necessary and there is no use spending billions to implement a new system that will pretty much be the same as fannie and freddie. All they need to do is keep the g-fee raised to build capital reserve to protect against another recession. This is a win win win situation. I mean taxpayers get their money back WIN. Congress looks good because they can tell the taxpayers that no money was lost and additional capital constraints are in place WIN. Fannie and Freddie are released from conservatorship and this stock explodes north and us shareholders WIN. a WIN WIN WIN all around. IMHO. Well thanks for the shout out Take it easy.
Thanks for checking it out. It makes me feel all the better as I see the more senate testimonies that point toward the GSE's staying.
Testimony at Senate Tomorrow leaning toward needing GSE's
Do you own DD. Please see testimonies I'm agreeing with Dr. Robert Van Order's testimony. You can read thru the testimonies here.
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=84e2b12b-b35c-4197-b2ad-7160d9973ccb
Awesome post obiteridctum! I like the part about we are looking past conservatorship! Thanks! That is music to my ears!
FHFA Report
Looks like Fannie and Freddie needed in the multifamily business imo
"While the magnitude of the market impacts cited in the reports
deserve further study, the reports highlight a fundamental tension that policymakers will have to consider as part of housing
finance reform. Without a government guarantee a fully private company may not provide the same level and scope of services in the marketplace, at least at current prices."
http://fhfa.gov/webfiles/25162/PRMF050313final.pdf
Blue,
Thanks your dd and great posts. Very interesting observation indeed!
More News for Mel Watt.
Mel Watt may be just what we are looking for. imo
Please see http://www.publicintegrity.org/2013/05/01/12606/mel-watt-enjoys-close-ties-financial-industries
"The North Carolina Democrat whom President Barack Obama has appointed to oversee mortgage finance giants Fannie Mae and Freddie Mac has received more campaign money from financial interests than any other industry or special interest."
"Fannie Mae’s and Freddie Mac’s PACs contributed $11,500 to Watt’s campaign from 2004 until their 2008 bailouts. Employees of the two companies gave at least $4,250 from 1998 through 2004, with Fannie’s controversial former CEO Franklin Raines chipping in $1,500 to help Watt keep his seat."