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Hi ... I can't speak for David Fiderer
but if the title is confusing you as it did me I see he has recently left this update at the top ....
(Clarification: The headline is based on my construction of the conservator's powers under HERA. The dialogue below simply quashes the notion that release from conservatorship would be at odds with Congressional intent.)
it looks like he is answering the comments left on site so he can explain better than I ...
maybe your right ... Billion is a lot of cash ...
@SenWarren @SherrodBrown @SenJeffMerkley @DavidVitter @SenJackReed pic.twitter.com/Y3hMimZRsW
— joshua rosner (@JoshRosner) December 22, 2015
Congressional Record: On January 2, 2018, FHFA Director Mel Watt may release GSEs from conservatorship
David Fiderer
http://fidererongses.blogspot.com/
Fiderer on GSEs and other stuff
David Fiderer's thoughts on the fate of GSEs and other financial phenomena.
http://fidererongses.blogspot.com/
Where in Tar-nation can a feller git some of that good Ole ...
Re-form'n ... Re-fraud-u-layton ... and rejuvenation
Oh make that to go and with no pickle or special sauce please ....
Podcast :Slate Money, with special guest Bethany McLean
The Housing Edition
Slate Money, with special guest Bethany McLean,
discusses Fannie and Freddie, high rents, and whether our co-host Jordan should buy a home.
http://www.slate.com/articles/podcasts/slate_money/2015/10/slate_money_on_fannie_and_freddie_home_ownership_and_high_rents.html
Video Reply :Columbia Global Reports and 'Shaky Ground' Launch Event
Bethany McLean, William Ackman and Franklin Raines
Replay here ...
Is this any way to run a mortgage market?
Here's the right solution
April 20, 2015Paulina McGrath
http://www.housingwire.com/blogs/1-rewired/post/33616-is-this-any-way-to-run-a-mortgage-market
Fannie Mae and Freddie Mac are especially vulnerable to losses from financial market volatility today because their existing capital cushions are extremely low. These Government Sponsored Enterprises or GSEs were the focus of the largest housing Federal bailout in history. Ironically, their lack of capital is a direct result of the Federal bailout deal and leaves them – yet, again – at risk for needing a second government bailout.
Let us first recall that each GSE reported disappointing fourth quarter 2014 financials. That alarming financial performance resulted from significant losses in the financial derivatives the GSEs use to hedge exposure to interest rate risk. It also highlighted the fact that the bailout agreement with the U.S. Treasury (codified in a Preferred Stock Purchase Agreement or PSPA) requires each GSE to remit all quarterly profits to the Treasury. Critically, it requires them to reduce existing capital cushions each quarter until they reach zero in 2018.
Yes, it is hard to believe that this shaky financial situation is the deliberate design of Federal policy, but it is. What is even more difficult to accept is the fact that acceptable capital levels could be restored easily and quickly. Yet, both Congress and the Administration appear content to pursue instead a long-term – with no imminent action even on the table – legislative reform strategy.
Here's my perspective:
The U.S. single-family mortgage market is one of the largest markets in the world. There were $9.8 trillion in mortgages outstanding as of March 15, 2015.The GSEs, in spite of the 2008 crisis, continue to be the axis of this market. As of March 2015, they owned or guaranteed nearly half - $4.5 trillion – of all outstanding single-family mortgages. The GSE underwriting guidelines, documents and practices continue to set the standard for the U.S. mortgage market as a whole. In fact, if a loan qualifies under GSE underwriting guidelines that loan merits a “qualified mortgage” classification of the CFPB regulations.
The GSEs are still pivotal to all market players – homebuyers, lenders and realtors, as well as a multitude of related venders -- and yet, we allow them conduct their massive businesses on nearly non-existent amounts of capital. For the combined $4.5 trillion in outstanding mortgages that the GSEs own or guaranty in securities, they hold a grand total of $6.4 billion in capital. That is billion with a “B” of capital today; zero, that is “0” with a “Z” by 2018.
In spite of their Achilles heel status in the U.S. housing market, the GSEs have been intentionally left vulnerable to the slightest hiccup in either the market or their financial performance and/or the most insignificant miscalculation in their hedging strategy.
And here's the right solution:
In addition to the sharp drop in income, a report recently issued by the FHFA Inspector General points out that the future profitability of the GSEs is by no means assured. “The enterprises have acknowledged in their public disclosures that adverse market and other changes could lead to additional losses and that their financial results are subject to significant variability from period-to-period.”
Managing my own mortgage banking company, I am well aware of the impact market volatility can have on income from quarter to quarter for even the most well managed and conservatively run company. That is the precise reason having a well-capitalized company is so important – to give you a cushion to absorb unexpected losses. Thus, you can have some bad quarters financially and still be able to carry on with your business.
That same common sense approach is true for the GSEs at the very heart of our modern secondary mortgage market. It is easy to remember the grim times of 2008, when the financial world seemed to be imploding with bankruptcies and receiverships.
Do we really want to risk a repeat of those times by allowing such shortsighted policies to continue?
We should all be demanding an amendment to the PSPA that would:
1. Stop the forced depletion of GSE capital cushions; and
2. Allow the GSEs to retain a portion of their earnings to build a sufficient capital to absorb future losses from unexpected market volatility and do without the need for a second Federal government bailout.
This is a sensible and necessary solution to the health and soundness of the linchpins of our mortgage finance system.
Bill Maloni
http://malonigse.blogspot.com/
Monday, April 20, 2015
In this corner, from Iowa, weighing….
"Investing in GSEs is Investing in America
It's as simple as that. Homes are more than just investments. "
Well said by George ... Well said
Well said Sogo ... Thank You !
Get on twitter if your not already ....
They could use a voice like yours over there ....
He may want to just chill not sure everyone wants the attention
Break Fast West Wing WEEEE!
David H. Stevens
Time Out! Clarification on GSE Reform
https://www.linkedin.com/pulse/time-out-clarification-gse-reform-david-h-stevens
A couple of weeks ago, I was on CNBC’s Squawk Box talking about the secondary mortgage marketplace and the state of conservatorship of Fannie Mae and Freddie Mac (the GSEs). Some clearly have misunderstood, so it’s time I clarify.
The GSEs are systemically critical providers of capital for both single family and multifamily mortgages, and the health of the real estate markets are in jeopardy as long as these two companies remain in their current state of conservatorship. The resolution of this conservatorship is vital to a functioning housing finance system that will be durable for the generations ahead.
Where are we today? We’re in the same place we were 7 years ago – Fannie and Freddie remain in perpetual conservatorship; they are still private companies being run by the government. Permanent conservatorship is not healthy for the market. The GSEs remain at risk because they have veritably no capital buffer to prevent draws on their line of credit with Treasury. And to be clear, the likelihood of one or both GSEs needing a draw from the Treasury department at some point in the future is almost a certainty. While the treasury line is certainly large enough to support any draw, the political risk of taking a draw threatens the entire system.
So what to do?
We cannot return to the old system of relying on implicit guarantees, and one that created a misalignment of incentives between shareholders and taxpayers. We need an outcome that protects the critical role these two firms play, and one that maintains the federal support behind their mortgage backed securities, but a system that also protects the taxpayer and eliminates some of the too big to fail concerns as well.
Last year Congress made a valiant effort toward passing reform legislation and resolving conservatorship, but ultimately came to a stalemate. Since then, what’s changed?
More voices are now calling for the government overseers to allow the GSEs to recapitalize and return to their prior status. These voices include:
Groups representing discrete sectors of the industry
GSE shareholders who stand to make a significant financial gain if recapitalization occurs
Some consumer advocates
A recent article from Seeking Alpha clearly demonstrates the GSE shareholder bias of recap, release and operate without a government guarantee (article referenced at the end of this post). They seem to care only about their profits and far less about the mortgage market and consumers.?
How some consumer advocates can side with this view is remarkable. It’s all about shareholder returns - that’s it. In my view, this cannot be the ultimate objective. A successful and sustainable housing finance system should be the goal and nothing more.
And this one point in the article says it all:
"Of course, the most influential members of the mortgage banking lobby might not want the government to exit their position with Fannie and Freddie. Why? Because right now, the credit quality of mortgage backed securities matches that of U.S. Treasuries. They benefit from an explicit guarantee created by the Treasury's Senior Preferred Stock Purchase Agreement."
Let's be clear, the explicit guarantee brings liquidity to the MBS market. Private capital needs to come back as well, but not at an exorbitant cost to families hoping to buy a home. The explicit federal guarantee benefits consumers and that cannot be easily replaced. Only Congress can reassert the guarantee, absent the Treasury support in the current state. ??Whether you’re for or against it, recapitalization of the GSEs is extremely unlikely given the provisions of the Preferred Stock Purchase Agreement (PSPA), the ongoing shareholder lawsuits, and the practical difficulties of returning Freddie and Fannie to their prior state. Moreover, most analysts estimate that it would take a decade or more of robust retained earnings coupled with a generous interpretation of the pre-crisis FHFA capital requirements to allow FHFA to release the GSEs from conservatorship.
So what are the possible paths forward? Those who care about a stable, liquid mortgage market must:
Work with Congress on solutions that could be accomplished now and remain beneficial in the long run.
Encourage the GSEs and the regulator to conduct new pilots to require credit enhancement on all loans with LTVs of 50% or higher. This change would effectively institute first loss risk sharing, thus reducing the taxpayer’s exposure to mortgage credit risk.
Facilitate efforts to speed the progress toward a GSE single security and the development of the common securitization platform (CSP). This needs to happen in months, not years. Institutional focus and discipline will fade if this is not implemented soon. To be clear, a single mortgage backed security is critical for liquidity and competition.
Develop language for a simpler housing finance reform bill that would focus on the core elements required for an efficient secondary mortgage market, but one that protects the critical elements of these two institutions; their people, processes, and systems.
Work to build coalitions across a broad set of stakeholders to bridge key policy divisions.
Right now, Fannie Mae and Freddie Mac are providing liquidity in the secondary market for residential mortgage in the absence of private capital. The unbalanced dependence here puts the entire system on untenable ground and presents enormous risks to taxpayers. Protecting what Fannie Mae and Freddie Mac do in support of the housing market and making sure the system protects taxpayers has to supersede the narrow, profit-focused motives of the shareholders of these two companies.
Reference: Seeking Alpha piece published 4/9 -http://seekingalpha.com/article/3057346-fannie-and-freddie-political-quagmire-needs-to-become-compr
Praying for you Bruce ... Stay Strong !
ya that Stockman guy belongs to WSJ and Fox .... we found him wandering around aimlessly out in the parking lot he normally has his name pinned to his sleeve but some joker (prolly Carney) ripped it off so he was a little confused about who he was and just exactly what year it is and as you might have guessed pretty much clueless about anything else.
I'm so sorry to hear of this I knew a couple years ago ... they too were newlyweds he got caught in a rip tide she tried to save him and she ended up drowning still somehow he got out ... very sad I had not thought of it until I read about your friends kids
ya that really hurt ... I mean I'm not a real troll I don't live under a bridge ... just an over pass
But thats ok he's not a real Pulitzer Prize nominee either ... so we're even
Also not a Pulitzer Prize nominee: Charles Gasparino of Fox Business
http://www.msnbc.com/your-business/also-not-pulitzer-prize-nominee-charl
Read/Google Maloni's new blog, Out 3-2-2015
--You don't need to be Chairman to lead the parade.
--How we can help Mike Capuano
--How Mike Capuano can help himself
--John Carney Twitter-geezing.
"You can't fix stupid..."
http://malonigse.blogspot.com/
Mo Bill ....
Monday, February 23, 2015
Hide the valuables and the feedstock, Congress is Back
Cats and Dogs
http://malonigse.blogspot.com/
I think Investors Unite Executive Director Tim Pagliara said it all when he asked ...
"Who borrows $189.5 billion dollars at 10% interest and pays it back in an average of three and a half years?
Answer: Somebody that didn’t need it in the first place.”
If Gretchen and the other good ladies and gentlemen of the press would start with that thought .... they may find lots of reasons why someone would want to evoke presidential privilege and to continue to muddy the waters.
Since this grand show was brought to us by our fine friends on the right ... the cast has grown and is now also being played by those other fine folks on the left
I would like to see someone come along and play both sides against the middle ... common Gretchen we know you are reading .......
There must be some way out of here said the joker to the thief
There's too much confusion", I can't get no relief
Businessmen, they drink my wine, plowmen dig my earth
None of them along the line know what any of it is worth.
No reason to get excited, the thief he kindly spoke
There are many here among us who feel that life is but a joke
But you and I, we've been through that, and this is not our fate
So let us not talk falsely now, the hour is getting late.
All along the watchtower, princes kept the view
While all the women came and went, barefoot servants, too.
Outside in the distance a wildcat did growl
Two riders were approaching, the wind began to howl.
OK ... good to hear keep yer helmet on and yer head down and fight the good fight .... better daze ahead
When you can't find the light
That guides you through a cloudy day
When the stars ain't shining bright
And it feels like you've lost your way
When those candle lights of home
Burn so very far away
Well you got to let your soul shine
Just like my daddy used to say
He used to say the soulshine
It's better than sunshine
It's better than moonshine
Damn sure better than rain
Hey now people don't mind
We all get this way sometimes
Got to let your soul shine
Shine 'til the break of day
I grew up thinkin' that I had it made
Gonna make it on my own
Life can take the strongest man
And make him feel so alone
Now and then I feel a cold wind
Blowin' through my aching bones
I think back to what my daddy said
He said, boy, it's the darkest before the dawn
He used to say the soulshine
It's better than sunshine
It's better than moonshine
Damn sure better than rain
Hey now people don't mind
We all get this way sometimes
Got to let your soul shine
Shine 'til the break of day
Sometimes a man can feel this emptiness
Like a woman has robbed him of his very soul
A woman too, god knows, she can feel like this
But hey, when your world seems cold
You got to let your spirit take control
He used to say the soulshine
It's better than sunshine
It's better than moonshine
Damn sure better than rain
Hey now people don't mind
We all get this way sometimes
Got to let your soul shine
Shine 'til the break of day
Have missed you Letgo ...
couldn't resist ... sorry
I got a girl with a little rubber head
Rinse her out every night just before I go to bed
She never talk back like a lady might do
An' she looks like she loves it every time I get through
And her name is
P-I-N-K-Y
P-I-N, no lie
K-Y, me-oh-my
She's $69.95
Give her a try
P-I-N-K-Y
P-I-N I cry
K-Y don't be shy
$69.95, boy
Give her a try
Her eyes is all shut in an ecstasy face
You can cram it down her throat, people, any old place
Throw the little switch on her battery pack
You can poot it, you can shoot it till your wife gets back
And her name is P-I-N-K-Y
P-I-N, I cry
K-Y, don't be shy
$69.95, boy
Give her a try
I got a girl with a little rubber head
Rinse her out every night just before I go to bed
She never talk back like a lady might do
An' she looks like she loves it every time I get through
Her eyes is all shut in an ecstasy face
You can cram it down her throat, people, any old place
Throw the little switch on her battery pack
You can poot it, you can shoot it till your wife gets back
You can poot it, you can shoot it till your wife gets back
You can poot it, you can shoot it till your wife gets back
You can poot it, you can shoot it till your wife gets back
You can poot it, you can shoot it till your wife gets back
You can poot it, you can shoot it till your wife gets back
This one's worth the read ... thanks David
Investors Unite Calls Carney out ....
http://investorsunite.org/welcome-to-carney-world-where-facts-are-optional/
Welcome to Carney-World, Where Facts Are Optional
- February 9, 2015
In his piece for the Wall Street Journal today (“Investors are Casualties in Battle Over GSEs”), John Carney got some key facts wrong. He writes:
“It is simply not the case that all of their [Fannie and Freddie] capital is spent on ‘executive branch prerogatives.’ Rather, the dividends remitted by them to the Treasury are spent in the same way as nearly all of the federal government’s general revenue. That is, in accordance with laws passed by Congress and signed by the president.”
Perhaps John Carney thinks that merely by stating something, he can will it to be true. But to claim that the federal government isn’t spending the money that it is taking from Fannie and Freddie on projects of its own discretion is just false. According to a paper by Dr. Clifford Rossi, a former senior risk management expert at Fannie and Freddie, in 2011 the Administration used proceeds from Fannie and Freddie to finance its payroll tax cut proposal. Rossi writes:
“In 2011, a levy of 10bps on top of existing g-fees was imposed as part of the Congressional compromise on the Payroll Tax Cut. In this case mortgage borrowers are subsidizing the payroll tax cut which amounts to a redistribution between them and those subject to the payroll tax.”
So it’s very clear that the money being siphoned out of Fannie and Freddie through the illegal Third Amendment Sweep is, in fact, being put toward other uses, and it’s inaccurate to state otherwise.
Carney also references “in accordance with laws passed by Congress.” Well, speaking of the law, that brings us to HERA, which FHFA and the Treasury very clearly violated in 2012 by changing the terms of the conservatorship to allow the government to sweep 100% of Fannie and Freddie’s profits.
Michael Krimminger, former senior policy advisor to the FDIC and deputy to the Chairman for Policy and General Counsel, and Mark Calabria, former senior advisor on the professional staff of the Senate Banking Committee authored a white paper released by Investors Unite last week that addresses this very fact. The paper’s title states the matter clearly: “The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles.” Calabria and Krimminger should know, as they were both involved in the drafting of HERA. Here’s an excerpt from their paper:
“The drafters of HERA never envisioned, nor intended, for Treasury to maintain a large equity stake in the companies. Treasury assistance was meant to be temporary, in the nature of debtor-in-possession financing. HERA also makes clear, as was intended by the Banking Committee, that FHFA maintain sole authority over when the Companies would enter or leave conservatorship. There simply is no authority for Treasury in this regard.”
Also this:
“Under the FDIA, as under HERA, conservatorships were intended to be relatively short-term proceedings designed to achieve either the rehabilitation of the failing bank with its full return to ‘sound and solvent’ operations under private control or the relatively prompt appointment of a receiver.
Perhaps most instructive for John Carney is this passage about the Third Amendment Sweep:
“Treasury has transformed the concept of conservatorships from ‘preserving and conserving’ to one of diverting value back to Treasury far in excess of the funds put into the Companies and conducting housing policy through the Companies’ predominant position in the current housing finance system.”
We hope that Mr. Carney will read HERA at some point. In fact, we recommend that all policymakers and media following this very important case read the statute. The case of Fannie and Freddie is about the rule of law. No matter what one thinks about Fannie and Freddie, there shouldn’t be any dispute over enforcing the laws passed by Congress.
From IU ...
http://investorsunite.org/perspectives-on-hera-shareholders-can-take-to-the-bank-or-at-least-should/
Perspectives on HERA Shareholders Can Take to the Bank – Or at Least Should
- January 29, 2015
During a teleconference call January 29, a House Financial Services Committee staff member with an obviously in-depth familiarity with Housing and Economic Recovery Act (HERA) of 2008 asked the authors of a new paper on the statute a pointed question.
Citing Sec. 4617(b)(2)(B) of the U.S. Code, he pressed whether that section of the law allows the government to take over the assets of mortgage market giants Fannie Mae and Freddie Mac with all powers of the shareholders. In other words, can’t the government do pretty much as it sees fit as the conservator of these government-sponsored enterprises (GSEs)? After all, aren’t the rights of the stockholders suspended during the conservatorship?
The only problem with this line of inquiry is that it misses other key components of the law as well as the intention of Congress – the letter and the spirit of the law. A complete reading of that section of the U.S. Code makes clear that it stipulates that the Federal Housing Finance Agency, which HERA created and vested all power in as conservator, is to do whatever is needed to “conserve and preserve” the GSE’s assets. There’s also the explicit and separate direction to conservators to takes steps necessary to put the regulated entity in a “sound and solvent condition.” In other words, a conservatorship is meant to be a temporary arrangement that anticipates restoring the GSEs and stockholders continue to retain all rights in the stock’s financial worth, which, by the way, is determined by the market, not the government.
Even allowing that laws are subject to interpretation, it is hard to argue that the drafters intended the opposite of what they said was intended. And Michael Krimminger and Mark Calabria, who recently published”The Conservatorships of Fannie Mae and Freddie Mac:Actions Violate HERA and Established Insolvency Principles,” know what the drafters intended. Krimminger, who was capping off a long and distinguished career at the Federal Deposit Insurance Corporation (FDIC) as its general counsel, and Calabria, who was a top aide to Senate Banking Committee Chairman Richard Shelby, understood more than most people in the room the statutory history and political imperatives that went into the letter and spirit of the law.
They understood Congress didn’t have to start from scratch when writing HERA. Lawmakers looked at bank conservatorships and receiverships under the Federal Deposit Insurance Act (FDIA) and made a conscious decision to replicate the provisions aimed at protecting stakeholders. Congress embraced the long-held understanding of conservatorships should be relatively short-term proceedings with the interests of stakeholders in mind.
“Foremost in the drafters’ minds was the importance of both continuing the Companies’ operations without disruption and maintaining market confidence in the fair treatment of the Companies’ stakeholders by the government,” they wrote.
It isn’t just on the definition of conservatorship where the white paper strips naked the illegality of the Administration’s current policy of using revenues from Fannie Mae and Freddie Mac as a general government checking account.
The paper also makes a compelling case that Congress wanted FHFA to be the lead agency in the conservatorship. Lawmakers opted to limit the Treasury Department’s role. They grasped that Fannie and Freddie were different animals than banks. They thought about it, debated it and still decided on narrow and confined roles for Treasury and other agencies.
That’s what makes the Third Amendment “sweep” by Treasury so audacious. Back to the question on teleconference, how can Fannie and Freddie ever become “sound and solvent” and shareholders compensated if Treasury snatches up the GSE’s profits every quarter? What’s more, if there is no way to create a buffer against future losses, will taxpayers once again have to pick up the tab in the next crisis affecting the housing market?
Krimminger and Calabria displayed an appreciation for legal precedent and political ramifications of HERA when they wrote, “These conservatorships most certainly were not profit-making enterprises for the regulators. In contrast to Treasury’s actions in the Companies’ conservatorships, banking regulators never considered it as possible that they could impose new, harsher deals after providing assistance or initiating conservatorship or use those transactions as vehicles to strip all remaining value from the banks. Why? Because it is not permitted under the law and would have devastating consequences to the future of banking.”
At the January 27 hearing before the House Financial Services Committee, FHFA Director Mel Watt seemed to acknowledge this wasn’t supposed to be the way HERA worked but lamented that his hands are tied since his predecessor, Ed DeMarco and Treasury worked out the Preferred Stock Purchase Agreements at the heart of the problem. As Krimminger and Calabria can tell Watt, his hands are actually free, legally, if not politically. But neither DeMarco nor any other agency officials ever have a free hand to work out an agreement that suits them but trumps a federal statute.
The analysis by Krimminger and Calabria makes what could be the most compelling case to date how flawed and legally dubious HERA’s execution has been and will continue to be until Congress and the Administration can agree on the future of mortgage secondary market giants.
your welcome .... spread the word !!
found this too ...
https://www.facebook.com/pages/Free-Fannie-and-Freddie/766158633458875?sk=timeline
Treasury and Conservatorship by Timothy Howard Jan 11 2015
please follow the link ...
http://investorsunite.org/discussion/topic/treasury-and-conservatorship-by-timothy-howard-jan-11-2015/
for the video .... and Davids analysis ...
Treasury and Conservatorship by Timothy Howard Jan 11 2015
This is a must read .... also check out Davids Video ...
please follow the link ...
http://investorsunite.org/discussion/topic/treasury-and-conservatorship-by-timothy-howard-jan-11-2015/
for the video .... and Davids analysis ...
My prayers are with you Bruce ... focus on getting better and I'm looking forward to reading all of your future posts.
yer welcome beta!! ... good stuff as always
Mo Bill ....
Monday, January 12, 2015
France, Phoenix, Mitch, Cartoonish, the Speaker
Today, We All Are Charlie Hebdo
And, Unfortunately, We All are France
http://malonigse.blogspot.com/
hopefully soon ... but alas only Judge Pratt knows for sure ..
Des Moines court case could change Freddie, Fannie investor makeup
"According its most recent financial report, published last week but covering only up until June 30, 2014, the Iowa Public Employee Retirement System has over $1 billion invested in both Fannie Mae and Freddie Mac"
This is worth looking at .... thanks!
http://investorsunite.org/discussion/topic/des-moines-court-case-could-change-freddie-fannie-investor-makeup-see-more-at/
Long time GSE shareholders will understand .....
Buy These WITHOUT LIMIT GSE News Dec 29, 2014 $FNMA $FMCC $FMCKJ $FNMAS
http://investorsunite.org/discussion/topic/buy-these-without-limit/
Please read the whole article and leave a comment here ...
http://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2014/12/21/restoring-nation-rule-law-start-iowa-case/20747517/
Restoring the nation's rule of law could start with Iowa case
more here ...
http://investorsunite.org/discussion/topic/restoring-the-nations-rule-of-law-could-start-with-iowa-case/
http://www.desmoinesregister.com/story/opinion/2014/12/21/restoring-nation-rule-law-start-iowa-case/20747517/
Restoring the nation's rule of law could start with Iowa case
Timothy J. Pagliara10:32 p.m. CST December 21, 2014
As amazing as it sounds, a lawsuit is making its way through the U.S. Southern District of Iowa that has the potential to affect the housing market, which is nearly 20 percent of our country's total economy. To say this case could have a long-lasting and significant impact on our nation is an understatement.
In the immediate aftermath of the 2008 financial crisis, the government provided Fannie Mae and Freddie Mac a loan to help stabilize the housing industry. These loans allowed the government sponsored enterprises (GSEs) to continue functioning. Fannie and Freddie have now paid back the original loan of $181 billion and have sent an excess payment of roughly $200 billion to the government.
This excess is due to the net worth sweep placed on the GSEs by an agreement struck by one government agency with a second — the Federal Housing Finance Agency (FHFA) and the U.S. Treasury Department. The agreement froze any payment of dividends to existing shareholders and swept them into the Treasury's pockets indefinitely. This agreement was made in August of 2012 as the GSEs were beginning to become profitable and projected to make billions in the coming months. Now, these funds due to shareholders are instead being used to pay down the deficit.
The illegal confiscation of shareholder dividends and the violation of our rights is why I founded Investors Unite, a coalition that advocates for shareholder rights. Our more than 1,400 members include parents who have invested for their children's education, factory workers who are saving for retirement, and pensioners who unknowingly invested in Fannie and Freddie but are now paying the price. Continuing to deny the legal rights of Fannie and Freddie investors perpetuates their uncertainty in the marketplace. The government's hold on the GSEs through conservatorship was never meant to be permanent and there is growing consensus that it must end.
Fannie Mae and Freddie Mac, the entities responsible for insuring over 90 percent of homeowners, have been under government control since the financial crisis in 2008. What most Americans are unaware of, however, is the unilateral decision made in 2012 by the Treasury Department to sweep 100 percent of their profits into government coffers after seeing projections that the entities would start making billions again. This has left thousands of investors like myself holding shares that are effectively meaningless. This illegal confiscation of property is unconstitutional.
The right of citizens to petition the government is guaranteed under the First Amendment. Fannie Mae and Freddie Mac shareholders have spent months looking for allies on Capitol Hill who see the illegality of the Third Amendment sweep and will help restore what is contractually owed to investors. Unfortunately, the unproductive environment in Washington has stalled this – along with many other significant legislative actions – and no one knows when the gridlock might end.
Under the Housing Economic Recovery Act, FHFA has the legal authority to end the conservatorship, but agency Director Mel Watt has resisted taking this action. There were encouraging signs recently when outgoing Chairman of the Senate Banking Committee Tim Johnson, D-S.D., urged Director Watt to end the conservatorship as congressional reform grows increasingly less viable, but since Sen. Johnson's comment, Treasury bureaucrats have rallied to protect their GSE-funded piggy bank.
The third recourse available to shareholders is the legal one, and one of the cases filed is being filed in Des Moines. The plaintiff, Continental Western Insurance Co., based in Urbandale, represents shareholders who have stake in Fannie and Freddie that are currently not being paid their just dividend. They are arguing that FHFA acted beyond the scope of their statutory authority as conservator when entering into the net worth sweep, effectively wiping out shareholders' rights. The defendant, the government, has motioned for dismissal. U.S. District Judge Robert Pratt has not yet made a decision to either let the case proceed or grant dismissal.
It is our hope that these proceedings will lead to the successful restoration of the rights of thousands of shareholders, victims of the government's illegal confiscation of their property. As long as shareholders' fate remains in flux, there will continue to be market uncertainty. Whether through administrative or legal mechanisms, it is critical to the future of our country that citizens know that the rule of law is restored and respected.
AUTHOR: TIM PAGLIARA is the founder of Investors Unite, a coalition of private investors in Fannie Mae and Freddie Mac. He is also chairman and CEO of CapWealth Advisors. Contact: www.investorsunite.org
Nice article thanks!
I saw this in the comments ....
JAMES STEDRONSKY
It's always amazing how there are never any individuals charged with these crimes, just ''banks". When the mafia gets charged, there always real people with great names like Joey the Mule and Tony Big Nose etc. But apparently no people do anything wrong at Banks. The computers or emails, I guess, go whacky say stupid stuff, make some bad loans and cost the poor banks billions.
I don't know, can't we have just one article with Pretty Boy Dimon doing a perp walk with a fedora covering his face. I mean $13 Billion is a really big number....... Hey, I've got it, maybe the numbers are so big so that Pretty Boy and Brian (Sticky Fingers) Moynihan don't have to do perp walks,
C'mon prosecutors, don't be so greedy. Take less money and give us some perp walks.
Thanks ! mostly repost from other spaces ...
but hey were all in this together and we gotta get it done!!
Here's a couple of things you can look into if ya have the time ...
http://petitions.moveon.org/sign/correcting-mistakes-fannie/?source=searchsource=s.fwd&r_by=11568622
Please sign the petition if you haven’t already …
Also if ya haven't already please join Investors Unite .....
very quick you can be in and out in a shake !
http://investorsunite.org
last but not least .... (my fave)
Stop in and say hello to Bill ....
http://malonigse.blogspot.com/
you'll be glad you did !!!
check out some of his older post .... he goes way back! (must have known Noah :p )
FHFA's Permanent Conservatorship Ignores the Law
MICHAEL H. KRIMMINGER
DEC 17, 2014 10:00am ET
http://www.americanbanker.com/bankthink/fhfas-permanent-conservatorship-ignores-the-law-1071687-1.html
Reform of U.S. housing finance is essential to avoiding another financial crisis. Since the U.S. placed Freddie Mac and Fannie Mae into conservatorships in 2008 under the Housing and Economic Recovery Act, the contours of this reform have been much debated but repeatedly deferred. Today, these companies remain wards of the state.
Most parties should be able to agree that the government-sponsored entities' current state of limbo is untenable. At best, the arrangement reinforces continued government dominance of the housing market. At worst, it distorts our housing finance system, preserves incentives to misprice mortgages and creates the potential for a future housing crisis.
Unfortunately, real reform seems more unlikely by the day. Policy views remain divided. And the government may see limited benefits to changing the status quo. In 2012, the Treasury Department unilaterally decided tochange the terms of the agencies' conservatorships and sweep 100% of Fannie and Freddie's profits to Treasury as dividends in perpetuity. This sweep continues to this day, despite the fact that Fannie and Freddie have nowpaid back almost $40 billion more than they were originally loaned. This prevents Fannie and Freddie from accumulating any cushion against future losses — potentially putting the taxpayers at further risk.
Investors in Fannie and Freddie have sued Treasury and the Federal Housing Finance Agency to challenge the continued conservatorships and profit sweeps. In September, the D.C. federal trial court rejected those challenges. While that decision is on appeal, there are even more fundamental problems with Treasury's actions.
The perpetual conservatorships and Treasury sweeps are a violation of every principle of insolvency law. I do not make this statement lightly. After more than twenty years at the Federal Deposit Insurance Corp., and frequent participation in domestic and international efforts to improve insolvency laws, I provided technical advice to Congress on HERA.
My primary model — and an internationally recognized standard — was the Federal Deposit Insurance Act. It has served this country well for more than 80 years by closing insolvent banks, protecting insured depositors, and recycling the failed bank's loans back to sound banks. In fact, HERA parallels the FDIA in virtually all of its provisions.
HERA was never meant to authorize permanent government control over the housing sector. Under HERA, the FHFA and Treasury have the clear statutory authority to begin reform by ending the conservatorships of Fannie and Freddie. FHFA director Mel Watt recently acknowledged this authority in a hearing before the Senate Banking Committee. Many, including Senate Banking Committee chairman Tim Johnson, have called on Watt to exercise that power.
The FHFA's statutory authority to end the conservatorship isn't a question of interpretation or policy debate. Like the FDIA, the law provides for conservatorships and receiverships to give the FHFA some flexibility to decide how best to resolve a failing Freddie or Fannie. However, this discretion is limited. In fact, HERA requires termination of the conservatorships and appointment of the FHFA as receiver if Freddie and Fannie remain insolvent. The FHFA director is required to make periodic findings on this point precisely to provide discipline to the process.
Not only does HERA provide this discipline, it also imposes duties on the FHFA as conservator. In this role, the FHFA is instructed to return Freddie and Fannie to "a sound and solvent condition" and to "preserve and conserve the assets and property" of the companies. The FDIA includes the same instructions. The FDIC has always treated conservatorships as short-term solutions leading to the recapitalization and return of the failing bank to full private control, or to a receivership and payment of creditors and stockholders.
The continued diversion of Freddie and Fannie's profits to Treasury misuses HERA as well as ignores the international standards underpinning all insolvency frameworks. This is important because one foundation of corporate finance, and our system of commercial laws, is that insolvency law assures creditors that the remaining value of the company will be paid out under defined priorities. If this standard is ignored, as it has been through the Treasury sweeps, it will undoubtedly affect future investment in housing finance and the financing costs for businesses.
The FHFA is ignoring the basic duty of a trustee: to protect the interests of all creditors. By keeping the companies in conservatorships and diverting their cash to Treasury, the FHFA effectively prefers one creditor over all others. While Treasury provided critical up-front funding to the GSEs, it has now been well-compensated under the original agreements. It cannot simply strip the companies of cash in perpetuity.
Every sound insolvency process, including HERA and the FDIA, repays the funding provided but then pays all creditors the remaining value. In bank resolutions, once the FDIC's cash outlay is repaid, the FDIC receives no more money. The continuation of the sweeps through the conservatorships is a violation of every principle established in bankruptcy and in the more than 80 years of FDIC bank resolutions. And it has no support in HERA.
Michael H. Krimminger is a partner at Cleary Gottlieb in Washington, D.C. and a former general counsel to the FDIC.
Yes! that would be great!
Thanks! Navycmdr ....
Did you see what KM said about Ed Royce on the TH717 blog ....
"Regarding poor Ed we have Bill Maloni to thank for that I found the link and one of his posts he even mentions TH717 his was the first post on the comment section and what prompted me to post it here""
Stop in and say hello to Bill too ....
http://malonigse.blogspot.com/
He's been on point longer than most of us
everyone leave him a Merry xmas! shout out ... he'll be happy to hear from you!!!