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Buy and stand back -- she is going to blow! Hello $20!!!
This is a great investment. There is nothing better but there are many ideas a whole lot worse. The law, the politics, the markets, and the cash flow lead you one to one direction: FnF get out C-ship, re-listed and the stock zips into the $40s just about now next year. This is gift.
Gold will go up. Gold is a measure of fear. Eygpt is falling into civil war. In fact the entire middle east remains a powder keg.
There is no substitute for FnF! The truth will set you free.
fyi Robert Liscouski,on the IMSC Bd of Directors, is a heavy hitter in the industry.
Huge selling pt for me at least.
Director
Mr. Liscouski is the CEO of Content Analyst, a software company that automates the analysis and categorization of large volumes unstructured text and data. He served as Assistant Secretary of Infrastructure Protection for the Department of Homeland Security, appointed by then Secretary Tom Ridge. There, he coordinated authority over the protection of all sectors of the nation's critical infrastructure, including agriculture, food, water, public health, transportation, and hazardous materials. Previously, he was the Director of Information Assurance for The Coca-Cola Company.
B9M- Been in since Dec and reading your copy since then. Just wanted to thank you for your work and posts on this bd. Very helpful.
There are no substitutes.....
A new piece. Doesn't have the right tone on chances of legislation which are very low...does have the quotes of quotes:
"Privately-owned Fannie Mae and Freddie Mac are critical to our nation’s economic security, lowering the cost and increasing the availability of home ownership. There are no substitutes."
Fannie Mae, Freddie Mac Shareholders Bitter over ‘Double Standard’
July 2, 2013
By ValueWalk Staff
Trouble Ahead For Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) Shareholders. Despite becoming one of the most highly capitalised penny stocks on the US markets earlier this year, the Federal National Mortgage Solution (FNMA) AKA Fannie Mae has taken a hammering on government plans to privatise the institution. Understandably, shareholders, many of which were already hit hard during the 2008 bailout are waiting anxiously to see how the proposed bill will fare in the senate.
Fannie Mae
Fannie Mae – A National Institution
Founded during the Great Depression as part of the New Deal domestic economy reforms, the original purpose of Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) was to expand the secondary mortgage market by securitising mortgages in the form of mortgage backed securities. However, during the 70s. Fannie Mae was allowed to purchase private mortgages leading to the formation of Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), affectionately known as Freddy Mac.
Some might argue that it was in 1999, when Fannie Mae came under pressure from the Clinton administration to expand into the subprime market, that its troubles began. At the time, the New York Times commented that although the move might not pose difficulties during ‘boom’ times, an economic downturn could cause problems and even prompt a government rescue plan.
Troubled Times
That prophecy was realized during the mortgage crisis of 2007 when many borrowers struggled to make their repayments, especially those in the subprime sector. Despite action by the government to bolster confidence in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA), share prices tumbled more than 90%. Ever since, there has been talk of the government taking control of the lender.
The collapse of the organization would mean a big headache for the government. Fannie Mae and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) own, or guarantee, half of the US mortgage market. Somewhere in the region of $6 trillion in bonds are owned by individuals and bodies throughout the world. Even the Chinese government has a stake. If Fannie Mae goes bankrupt, there would be huge global ramifications.
As a result, the government decided to take conservator-ship of the banks. In what was labelled ‘one of the most sweeping government interventions in private financial markets in decades’, CEOs and boards of directors were summarily dismissed. Share prices plummeted, investors lost $41 billion and the stocks were eventually delisted from the NYSE.
Is this the end of the line for Fanny Mae?
Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) continued to trade as a penny stock and enjoyed a spectacular run between March and May of this year. Now, however, that has come to an abrupt end with the bill presented by Bob Corker, a Tennessee Republican and Mark Warner, a Virginia Democrat proposing to wind down both entities over a five-year period:
‘It’s time to end this failed model,’ commented Sen. Bob Corker.
Clearly, this raises the distinct possibility that equity owners will be wiped out. So shareholders have filed a complaint stating that when the entities were placed in conservator-ship back in 2008, the government did not abide by the requirements for conservator-ship established by HERA. The plaintiffs argue that the three amendments to the Preferred Stock Purchase Agreements forced the GSEs to ‘completely and fully transfer any remaining economic value from their shareholders to the treasury guaranteeing that shareholders are left with nothing’.
For the greater good?
If the bill goes through, the result will be higher lending standards and higher mortgage rates. Private mortgage insurers will have assume the credit risk. That is, of course, if they are willing to step up to the plate. The mortgage market will be transformed. Good for the country – maybe, but certainly not good for common shareholders at the bottom of the pile.
There is hope. Bruce Berkowitz, the famed value investor from Fairholme Capital Management has a $2.4 billion stake in the preferred shares of Freddie and Fannie, Berkowitz argues that the institutions should be restructured instead of wound down:
‘Privately-owned Fannie Mae and Freddie Mac are critical to our nation’s economic security, lowering the cost and increasing the availability of home ownership. There are no substitutes.’
The problem for shareholders is that, ultimately, conservator-ship was the right decision for the country, it just wasn’t the right decision for investors. And this time again, it will take more than the voice of Berkowitz to sway the court’s decision.
Check out our stellar Board of Directors. We are they. IMSC will go "big-time" in the new few quarters. Right place, right tech, right staff, right BD. Dogs have their place right behind our e-sniffers!
We are still at the basement level of the third great run. $25 would be ok with me.
Another proof of how politically smart the White House is. Watch what they do with FNF for folks and by extension - the shareholders.
Right back on message then: "This is one of the rare cases where you get a binary outcome with a better than 50-50 payoff." yahman!
Or 4/13-14/1865 or 7/3/1863 for that matter. There are turning points in life. And some are good like FnF!
A rare, rare chance to hit it out-of-the-park C.
Gap up this AM?
"I can see at least $ 25.00 share would be realistic, could be better, maybe $ 35.00"
You have to love America!
To be clear - only Congress can create a new entity. And Congress is all over the map and very likely to stay so.
On whole I agree -- Congress could set any rule it wants with enough votes- but Congress is very divided so defacto you are right.
Looking good Billie Ray!
Posted this info for an earlier piece today --believe for the M Fool--got that fact wrong. It is one of the five reasons why we are a go. Congress - the House and Senate -- have a hard time passing any thing. Hell these guys could not agree to pass leg to reduce the student loan rates which just doubled.
Congress pass statutes. The Exec Branch implements the statutes through rules or regs. Both are law. In our case Treasury took a unilateral action(would think off HERA of 2008). Below is the actual 8/17/2012 Treasury press release on it. This is very very good for us.
Read the Bloomberg story I sent early -- it says it all.
Treasury Department Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac
8/17/2012 Page Content
?
Modifications to Preferred Stock Purchase Agreements Will Make Sure That Every Dollar of Earnings Fannie Mae and Freddie Mac Generate Will Benefit Taxpayers
Announcement Will Support the Continued Flow of Mortgage Credit
during a Responsible Transition to a Reformed Housing Finance Market
WASHINGTON -- The U.S. Department of the Treasury today announced a set of modifications to the Preferred Stock Purchase Agreements (PSPAs) between the Treasury Department and the Federal Housing Finance Agency (FHFA) as conservator of Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) that will help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market.
“With today’s announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market,” said Michael Stegman, Counselor to the Secretary of the Treasury for Housing Finance Policy. “As we continue to work toward bi-partisan housing finance reform, we are committed to putting in place measures right now that support continued access to mortgage credit for American families, promote a responsible transition, and protect taxpayer interests.”
The modifications to the PSPAs announced today are consistent with FHFA’s strategic plan for the conservatorship of Fannie Mae and Freddie Mac that it released in February 2012. The modifications include the following key components:
Accelerated Wind Down of the Retained Mortgage Investment Portfolios at Fannie Mae and Freddie Mac
The agreements require an accelerated reduction of Fannie Mae and Freddie Mac’s investment portfolios. Those portfolios will now be wound down at an annual rate of 15 percent – an increase from the 10 percent annual reduction required in the previous agreements. As a result of this change, the GSEs’ investment portfolios must be reduced to the $250 billion target set in the previous agreements four years earlier than previously scheduled.
Annual Taxpayer Protection Plan
To support a thoughtfully managed wind down, the agreements require that on an annual basis, each GSE will – under the direction of their conservator, the Federal Housing Finance Agency – submit a plan to Treasury on its actions to reduce taxpayer exposure to mortgage credit risk for both its guarantee book of business and retained investment portfolio.
Full Income Sweep of All Future Fannie Mae and Freddie Mac Earnings to Benefit Taxpayers for Their Investment
The agreements will replace the 10 percent dividend payments made to Treasury on its preferred stock investments in Fannie Mae and Freddie Mac with a quarterly sweep of every dollar of profit that each firm earns going forward.
This will help achieve several important objectives, including:
· Making sure that every dollar of earnings that Fannie Mae and Freddie Mac generate will be used to benefit taxpayers for their investment in those firms.
· Ending the circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury.
· Acting upon the commitment made in the Administration’s 2011 White Paper that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market in their prior form.
· Supporting the continued flow of mortgage credit by providing borrowers, market participants, and taxpayers with additional confidence in the ability of the GSEs to meet their commitments while operating under conservatorship.
· Providing greater market certainty regarding the financial strength of the GSEs
FHFA and Treasury are in control- barring Congressional action which is impossible to get in thiis the 114th or the last Congress the 113th. (As a rule Congress only acts when there is a crises -- not a surplus of green.)
Moreover, Watt did not take the job wind them down. The White House would not waste the political capital on an appointee if that was their plan. No Sir. They intent to retool them and stand them back up.
Bateman is Bateman: A nutbag killer -- nice suits though.
TREASURY -- not Congress --took the FnF revenue stream through regulation not legislation. SO Treasury can give back the funds flow with a push-of-a-button and a press release -- tomorrow.
See below:
U.S. Revises Payment Terms for Fannie Mae, Freddie Mac
By Cheyenne Hopkins & Clea Benson - Aug 17, 2012 5:28 PM ET Facebook Share Tweet LinkedIn Google +1 14 Comments
Print QUEUEQ
The U.S. Treasury Department is altering how Fannie Mae (FNMA) and Freddie Mac pay taxpayers for the government’s stake in the firms, ending a system that sometimes required them to spend more on dividends than they earned.
The mortgage companies, which have drawn $190 billion in aid and paid $46 billion in dividends since being taken over by U.S. regulators in 2008, will turn over any quarterly profits to the Treasury, the agency said today. The change replaces a requirement that the companies pay quarterly dividends of 10 percent on the government’s nearly 80 percent stake.
Enlarge image U.S. Treasury Accelerates Winddown of Fannie and Freddie
U.S. Treasury Accelerates Winddown of Fannie and Freddie U.S. Treasury Accelerates Winddown of Fannie and Freddie Andrew Harrer/Bloomberg
Republicans in Congress have called for an end to the two taxpayer-owned companies, which now own or guarantee about 60 percent of U.S. home loans.
Republicans in Congress have called for an end to the two taxpayer-owned companies, which now own or guarantee about 60 percent of U.S. home loans. Photographer: Andrew Harrer/Bloomberg
Sponsored Links Fannie Mae, based in Washington, and Freddie Mac (FMCC) of McLean, Virginia, also will be required to shrink their investments in mortgages and mortgage-backed securities by 15 percent annually, up from 10 percent, the Treasury said.
“We are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market,” Michael Stegman, counselor to the secretary of the Treasury for housing finance policy, said in the statement.
Both Fannie Mae and Freddie Mac this month reported second- quarter profits even after paying dividends on Treasury’s preferred shares, marking the first time either company had enough revenue to avoid taking a Treasury draw since the first quarter of 2011. In some quarters, the government-sponsored enterprises sought aid because operating profits were exceeded by their dividend obligations.
Preferred Shares
Fannie Mae’s 8.25 percent preferred perpetual shares slumped 55 percent to $1.05 as of 4 p.m. after the Treasury Department announcement.
One motivation for the change was Treasury’s concern that investors would be skittish about buying GSE bonds after Jan. 1, when a ceiling on government support for the companies kicks in, according to a banker who discussed the policy with Treasury officials. Each company will be limited after that to no more than $200 billion in taxpayer support.
Treasury spokesman Matt Anderson declined to comment on the agency’s motivation beyond the contents of the statement.
The new system means that the companies will be unlikely to reach the aid ceiling, analysts for Barclays Research said in an e-mailed report.
“This puts to rest any worries about GSE credit risk even in intermediate maturities,” the Barclays analysts said.
Yields Fall
A Bloomberg index of yields on Fannie Mae-guaranteed mortgage bonds trading closest to face value fell about 1 basis point to 129 basis points, or 1.29 percentage points, higher than an average of five- and 10-year Treasury rates as of 3 p.m. in New York. The spread yesterday reached the widest in a month. The yield relative to U.S. government debt on its unsecured notes due August 2017 fell 4 basis points to 14 basis points, the lowest since the debt’s July 18 issuance.
The new payment structure accelerates the rate at which the risk in the companies’ portfolios is transferred to private investors and makes it impossible for Fannie Mae and Freddie Mac to rebuild capital. At the same time, it doesn’t address the broader question of the future of the two companies, which own or guarantee about 60 percent of U.S. home loans.
Republicans in Congress have called for an end to Fannie Mae and Freddie Mac. Treasury Secretary Timothy F. Geithner has said he will propose a housing finance overhaul that may include dismantling the firms. Geithner said at the beginning of this year that the administration would release a wind-down plan by the spring. No plan has been released.
‘Blunts Efforts’
Representative Spencer Bachus, the Alabama Republican who leads the House Financial Services Committee, said Treasury’s move “blunts efforts to reform Fannie and Freddie.”
“The administration took its first step toward GSE reform in nearly four years today,” Bachus said in a statement. “Unfortunately, rather than announcing steps to wind down Fannie Mae and Freddie Mac, the administration opted to create a permanent, off-budget source of funding for housing that it will control.”
Representative Scott Garrett, a New Jersey Republican, said the new policy amounted to “continuing to kick the can.”
“Instead of devoting time and energy towards prolonging bailouts, the Obama Administration should work with Congress to wind these companies down and create a new and sustainable housing finance system where taxpayers are not at risk,” Garrett said in an e-mailed statement.
Peter Wallison, co-director of the American Enterprise Institute’s program on financial policy and a frequent critic of the GSEs, said the new arrangement will help ensure the companies eventually are wound down.
‘Good Idea’
“The most significant issue here is whether Fannie and Freddie will come back to life because their profits will enable them to re-capitalize themselves and then it will look as though it is feasible for them to return as private companies backed by the government,” Wallison said in a telephone interview. “What the Treasury Department seems to be doing here, and I think it’s a really good idea, is to deprive them of all their capital so that doesn’t happen.”
Karen Shaw Petrou, founder and managing partner of Federal Financial Analytics in Washington, said winding down the GSEs isn’t “a realistic prospect any time soon.”
“Regardless of this agreement, the GSEs will still be the bulwark of U.S. mortgage finance -- not exactly a wind-down,” she said in a statement. “Treasury could have changed the agreement any time over the past four years and, had it done so, the GSEs now would be a lot more stable and a real wind-down a lot more likely.”
Like a said watch the White House/Treasury and soon Watt. They have plan. It is brilliant.
This took Fan and Fred off the chopping block: "Blunts Efforts’
Representative Spencer Bachus, the Alabama Republican who leads the House Financial Services Committee, said Treasury’s move “blunts efforts to reform Fannie and Freddie.”
KEY POINT: TREASURY -- not Congress --took the funds through regulation not legislation. SO Treasury can give back the fund flow with a push-of-a-button and a press release:
See below:
U.S. Revises Payment Terms for Fannie Mae, Freddie Mac
By Cheyenne Hopkins & Clea Benson - Aug 17, 2012 5:28 PM ET Facebook Share Tweet LinkedIn Google +1 14 Comments
Print QUEUEQ
The U.S. Treasury Department is altering how Fannie Mae (FNMA) and Freddie Mac pay taxpayers for the government’s stake in the firms, ending a system that sometimes required them to spend more on dividends than they earned.
The mortgage companies, which have drawn $190 billion in aid and paid $46 billion in dividends since being taken over by U.S. regulators in 2008, will turn over any quarterly profits to the Treasury, the agency said today. The change replaces a requirement that the companies pay quarterly dividends of 10 percent on the government’s nearly 80 percent stake.
Enlarge image U.S. Treasury Accelerates Winddown of Fannie and Freddie
U.S. Treasury Accelerates Winddown of Fannie and Freddie U.S. Treasury Accelerates Winddown of Fannie and Freddie Andrew Harrer/Bloomberg
Republicans in Congress have called for an end to the two taxpayer-owned companies, which now own or guarantee about 60 percent of U.S. home loans.
Republicans in Congress have called for an end to the two taxpayer-owned companies, which now own or guarantee about 60 percent of U.S. home loans. Photographer: Andrew Harrer/Bloomberg
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Fannie Mae, based in Washington, and Freddie Mac (FMCC) of McLean, Virginia, also will be required to shrink their investments in mortgages and mortgage-backed securities by 15 percent annually, up from 10 percent, the Treasury said.
“We are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market,” Michael Stegman, counselor to the secretary of the Treasury for housing finance policy, said in the statement.
Both Fannie Mae and Freddie Mac this month reported second- quarter profits even after paying dividends on Treasury’s preferred shares, marking the first time either company had enough revenue to avoid taking a Treasury draw since the first quarter of 2011. In some quarters, the government-sponsored enterprises sought aid because operating profits were exceeded by their dividend obligations.
Preferred Shares
Fannie Mae’s 8.25 percent preferred perpetual shares slumped 55 percent to $1.05 as of 4 p.m. after the Treasury Department announcement.
One motivation for the change was Treasury’s concern that investors would be skittish about buying GSE bonds after Jan. 1, when a ceiling on government support for the companies kicks in, according to a banker who discussed the policy with Treasury officials. Each company will be limited after that to no more than $200 billion in taxpayer support.
Treasury spokesman Matt Anderson declined to comment on the agency’s motivation beyond the contents of the statement.
The new system means that the companies will be unlikely to reach the aid ceiling, analysts for Barclays Research said in an e-mailed report.
“This puts to rest any worries about GSE credit risk even in intermediate maturities,” the Barclays analysts said.
Yields Fall
A Bloomberg index of yields on Fannie Mae-guaranteed mortgage bonds trading closest to face value fell about 1 basis point to 129 basis points, or 1.29 percentage points, higher than an average of five- and 10-year Treasury rates as of 3 p.m. in New York. The spread yesterday reached the widest in a month. The yield relative to U.S. government debt on its unsecured notes due August 2017 fell 4 basis points to 14 basis points, the lowest since the debt’s July 18 issuance.
The new payment structure accelerates the rate at which the risk in the companies’ portfolios is transferred to private investors and makes it impossible for Fannie Mae and Freddie Mac to rebuild capital. At the same time, it doesn’t address the broader question of the future of the two companies, which own or guarantee about 60 percent of U.S. home loans.
Republicans in Congress have called for an end to Fannie Mae and Freddie Mac. Treasury Secretary Timothy F. Geithner has said he will propose a housing finance overhaul that may include dismantling the firms. Geithner said at the beginning of this year that the administration would release a wind-down plan by the spring. No plan has been released.
‘Blunts Efforts’
Representative Spencer Bachus, the Alabama Republican who leads the House Financial Services Committee, said Treasury’s move “blunts efforts to reform Fannie and Freddie.”
“The administration took its first step toward GSE reform in nearly four years today,” Bachus said in a statement. “Unfortunately, rather than announcing steps to wind down Fannie Mae and Freddie Mac, the administration opted to create a permanent, off-budget source of funding for housing that it will control.”
Representative Scott Garrett, a New Jersey Republican, said the new policy amounted to “continuing to kick the can.”
“Instead of devoting time and energy towards prolonging bailouts, the Obama Administration should work with Congress to wind these companies down and create a new and sustainable housing finance system where taxpayers are not at risk,” Garrett said in an e-mailed statement.
Peter Wallison, co-director of the American Enterprise Institute’s program on financial policy and a frequent critic of the GSEs, said the new arrangement will help ensure the companies eventually are wound down.
‘Good Idea’
“The most significant issue here is whether Fannie and Freddie will come back to life because their profits will enable them to re-capitalize themselves and then it will look as though it is feasible for them to return as private companies backed by the government,” Wallison said in a telephone interview. “What the Treasury Department seems to be doing here, and I think it’s a really good idea, is to deprive them of all their capital so that doesn’t happen.”
Karen Shaw Petrou, founder and managing partner of Federal Financial Analytics in Washington, said winding down the GSEs isn’t “a realistic prospect any time soon.”
“Regardless of this agreement, the GSEs will still be the bulwark of U.S. mortgage finance -- not exactly a wind-down,” she said in a statement. “Treasury could have changed the agreement any time over the past four years and, had it done so, the GSEs now would be a lot more stable and a real wind-down a lot more likely.”
I have too. The Enterprises are great and do alot for the world economy - that is why they will be retooled and set back up -- its leaders a few years back sucked repeat sucked. Huge DC - Potomac soaked egos. Those idiots are gone. New teams of top flight fin pros are in control.
Great news. IMSC is a baby elephant still being nursed. Soon enough her trumpet-call will be heard throughout the jungle!
FnF were great American Dream Makers: a home of your own! And they will be again.
READ THIS: "Creating a stable and liquid housing finance system that provides certainty to market participants is crucial to the health of the American economy, and should be a top priority of the Financial Services Committee." U.S. Rep. M. Waters 6/28/2013. These are the words that tell you FnF will be here in 2030!
WHY FNF remain:
1)All other proposals are don't create clear and measurable international trading markets/platforms for this trillion dollar indusry.
WHY Commons remain:
Value in the Enterprises. FnF are money machinces. The US Constitution, US laws, and US courts. It was baked in the cake in 2008!
WHY the drama:
Too much emotion in DC not enough plain horse-sense.
To quote Congresswoman Waters, Ranking Memeber of the Fin Services Committee: "Creating a stable and liquid housing finance system that provides certainty to market participants is crucial to the health of the American economy, and should be a top priority of the Financial Services Committee.
As everyone here today knows, reform is particularly ripe for discussion now that the stabilization of the housing market is really taking shape. After receiving about $187 billion in taxpayer support following their entry into conservatorship in 2008, Fannie Mae and Freddie Mac are once again profitable. Together, they will have paid the Treasury Department about $132 billion in dividends by the end of June."
Thanks Mac44. Watch Watt, the White House, and Treasury. These folks know what they are doing with FnF. These huge huge markets need certainty and clarity. Only FnF have that.
They do C. Fairholme has declared. “There are no substitutes.” Major players know this now. Great days ahaed. But make no mistake - there are some in DC who take a different view but these folks can't develop a counter solution (not even afet 5 yrs) that works nearly well as the green GSE whales. Tide and time on our side.
Together [Fan and Fred] they will have paid the Treasury Department about $132 billion in dividends by the end of June.
There is no other choice. The green GSEs whales will run.
"Creating a stable and liquid housing finance system that provides certainty to market participants is crucial to the health of the American economy, and should be a top priority of the Financial Services Committee."
"After receiving about $187 billion in taxpayer support following their entry into conservatorship in 2008, Fannie Mae and Freddie Mac are once again profitable. Together, they will have paid the Treasury Department about $132 billion in dividends by the end of June."
The Congresswoman see that FnF for what the are -- the great funders of the American Dream.
Congresswoman Waters, Ranking Memeber of the Fin Services Committee seems to support keeping FnF: Two excerpts and full comments below:
"I hope that we can have a robust discussion, and one that gives more perspective on the various approaches that have been floated by both Members of Congress and outside stakeholders. Creating a stable and liquid housing finance system that provides certainty to market participants is crucial to the health of the American economy, and should be a top priority of the Financial Services Committee.
As everyone here today knows, reform is particularly ripe for discussion now that the stabilization of the housing market is really taking shape. After receiving about $187 billion in taxpayer support following their entry into conservatorship in 2008, Fannie Mae and Freddie Mac are once again profitable. Together, they will have paid the Treasury Department about $132 billion in dividends by the end of June.
Waters Hosts Members, Industry Leaders for GSE Reform Roundtable
June 28, 2013
WASHINGTON, D.C. – Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, convened her second bipartisan panel this morning on Capitol Hill to discuss various proposals for reform of the Government-Sponsored Enterprises and the secondary mortgage market. Today’s discussion, builds on the April session by providing an opportunity for industry stakeholders to share their point of view on how to approach reform.
“I convened this discussion today because I believe it is essential for the Congress to move forward and consider housing finance reform proposals,” said Ranking Member Waters in her opening remarks. She continued, “I am very much interested to hear from the industry participants we have here today about their perspectives on reform.”
Discussion proved to be a very substantive, as industry participants gave their perspective on reform and addressed the recently unveiled Corker-Warner Housing Finance Bill. The panelists included Bill Hampel, Senior Vice President and Chief Economist at the Credit Union National Association, Anthony Hutchingson, Senior Policy Representative at the National Association of Realtors, Ann Grochala, Vice President of Lending and Housing Policy for the Independent Community Bankers of America, Mike Fratantoni, Vice President of Single-Family Research and Policy Development at the Mortgage Bankers Association, Cindy Chetti, Senior Vice President of Government Affairs at the National Multi Housing Council, and Tom Deutsch, Executive Director at the American Securitization Forum.
Attending the discussion were Representatives John C. Carney, Jr., Michael E. Capuano, Al Green, Nydia M. Velázquez, Emanuel Cleaver, II, Dan Kildee, Joyce Beatty, Carolyn Maloney, Bill Foster, and Melvin L. Watt.
“Now is the time to set the foundation for a new housing finance system that ensures access and affordability, while also protecting taxpayers,” stated Waters. She told those present that she hoped the Financial Services Committee will move “forward aggressively” by beginning to “hold hearings on some of the various proposals that have been submitted.”
Below is Ranking Member Waters’ opening statement:
A Way Forward for Housing Finance Reform: Finding Sustainable Solutions to Ensure Access, Affordability, and Taxpayer Protection
Good morning. As the Ranking Member of the Financial Services Committee, I am very pleased to welcome all of you to the second in a series of bipartisan panel briefings I’m organizing during the 113th Congress to discuss emerging issues in housing and financial services.
As I mentioned at the last panel in April, I hosted three of these panels during the last Congress and found the interaction between the panelists, the Members in attendance, and the audience to be a very good compliment to the work we do more formally in the Committee. This type of setting allows for a more conversational dialogue to occur, and it can help inform us as we engage in Committee hearings and mark-ups.
I convened this discussion today because I believe it is essential for the Congress to move forward and consider housing finance reform proposals. Now is the time to set the foundation for a new housing finance system that ensures access and affordability, while also protecting taxpayers.
As everyone here today knows, reform is particularly ripe for discussion now that the stabilization of the housing market is really taking shape. After receiving about $187 billion in taxpayer support following their entry into conservatorship in 2008, Fannie Mae and Freddie Mac are once again profitable. Together, they will have paid the Treasury Department about $132 billion in dividends by the end of June.
At the same time, Director DeMarco is taking aggressive steps to shrink the footprint of the Enterprises and use his administrative authority at the Federal Housing Finance Agency (FHFA) to engage in under-the-radar housing finance reform. This includes everything from the joint securitization infrastructure that FHFA is facilitating, to the Servicing Alignment Initiative, reducing the GSEs footprint in multifamily housing, to the Enterprises launching risk-sharing transactions that will try to gauge the private market’s appetite for mortgage credit risk.
While the Director is quietly pursuing these reforms, we’re also seeing a number of other policy changes take shape that will leave a lasting imprint on our mortgage markets. As home prices stabilize and the economy recovers, the Federal Reserve has indicated it is willing to reduce its support for mortgages, which helped send interest rates up significantly in just the last month. The Administration has taken aggressive steps to shore-up the insurance fund of the Federal Housing Administration (FHA), though I think we all acknowledge that legislative reform is also needed. The Consumer Financial Protection Bureau is completing their mortgage rules under Dodd-Frank, trying to balance concerns about access to credit with a desire to prevent the types of predatory lending that led to the 2008 crisis. And our banking regulators may finalize Basel III next month, trying to sort out how various categories of mortgage loans will be treated for capital purposes.
Just this week, we saw substantial movement forward on housing finance reform, with Senators Corker and Warner introducing a bipartisan reform proposal to wind-down Fannie Mae and Freddie Mac, and replace them with a government re-insurance company that provides a catastrophic guarantee on mortgage-backed securities. I hope to discuss this proposal and others more thoroughly during today’s panel.
And of course, we saw my colleague and dear friend, Congressman Mel Watt, perform spectacularly at his nomination hearing before the Senate Banking Committee. I hope that the Senate moves forward quickly to confirm Congressman Watt to that position.
So with that said, I am very much interested to hear from the industry participants we have here today about their perspectives on reform.
At our last panel discussion, we heard about proposals to create new, chartered mortgage institutions that would sell credit insurance on qualified mortgage-backed securities; we heard about a plan to allow the GSEs to recapitalize through retained earnings; and we heard about a plan that would have a new Public Guarantor sell a limited government guarantee for the single and multi-family markets. This last structure is very similar to the Corker-Warner proposal unveiled this week, and I’m curious to hear the panelists’ thoughts on it now that it has been fleshed out in legislative text.
I hope that we can have a robust discussion, and one that gives more perspective on the various approaches that have been floated by both Members of Congress and outside stakeholders. Creating a stable and liquid housing finance system that provides certainty to market participants is crucial to the health of the American economy, and should be a top priority of the Financial Services Committee.
11.20% COMMON shares Held by Institutions, IT was 1.3% two months ago. Fannie Mae is a 6 bagger in waiting. Time to get in bed with her.
UP and Away! These are money monstors.
This is Frank D. Raines.
So you nothing of Washington, D.C. and FDR I see. It is a long tale. It is not important. Just know that there are no other options than Fannie and Fred. It will be a battle. It always is. Tide and time on our side. The big buys get it. The White House gets it. The twin green GSE whales will rise!