Fannie Mae-No Politics (FNMA)

[Dax1]

This is the response I got from Feinstein.

April 7, 2014





Dear

Thank you for writing to me regarding Fannie Mae and Freddie Mac payments to the U.S. Treasury. I appreciate hearing from you, and I apologize for the delay in my response.

Fannie and Freddie were taken into Federal conservatorship under the newly-created Federal Housing Finance Agency (FHFA) following the housing market crash. Freddie Mac has received $71.3 billion from the US Treasury, while Fannie Mae has received $116.1 billion. In exchange for these investments, Treasury owns senior preferred stock in each Enterprise. Both Fannie and Freddie have made dividend payments on these shares. As of May 2013, Freddie Mas has paid $30.8 billion in cash dividends to Treasury, while Fannie has paid $95 billion. To be clear, under current law, payments made to Treasury from Fannie and Freddie do not repay the assistance they received during the financial crisis. These payments are dividends on the stock shares owned by the Treasury; similar to dividends a company may pay an individual investors who owns its stock shares.

The current structure of Fannie Mae and Freddie Mac in conservatorship was not originally envisioned to be a permanent solution. There is broad consensus that changes to Fannie Mae and Freddie Mac will need to be made. There are differing proposals for how to do so. One reform sponsored by Senators Mark Warner (D-VA) and Bob Corker (R-TN), the "Housing Finance Reform and Taxpayer Protection Act" (S. 1217), would replace Fannie and Freddie with a "Federal Mortgage Insurance Corporation," based on the Federal Deposit Insurance Corporation. Representative Jeb Hensarling (R-TX) put forward the "Protecting American Taxpayers and Homeowners Act" (H. R. 2767), which would wind down Fannie and Freddie, and limit the role of the Federal government to primarily insuring loans made to first-time homebuyers and low income buyers.

I recognize that many Californians have invested in Fannie Mae and Freddie Mac stock and experienced large losses when the Government-Sponsored Enterprises (GSEs) were taken into conservatorship. While I do agree that Congress should work hard to avoid action that would bring undue harm to investors, it is also it is important to note that without Federal assistance, shares in these enterprises likely would have lost all value.

Again, thank you for writing. Please know that I appreciate your concerns and I will keep your thoughts in mind should relevant legislation come before the full Senate. H.R. 2767 is currently is awaiting consideration by the full House. S. 1217 is awaiting consideration in the Senate Banking Committee, of which I am not a member. If you have additional questions or comments, please feel free to contact my Washington, D.C. office at [phone]. Best regards.

Sincerely,



Dianne Feinstein
United States Senator