Fannie Mae-No Politics (FNMA)

[navycmdr]

Mel Watt Gives Fannie and Freddie Shareholders A Jolt

Anyone who mistook last week for the dawning of a new, golden era for shareholders of Fannie Mae and Freddie Mac got a dose of bitter truth over the weekend. In a C-Span interview that aired Sunday, Federal Housing Finance Agency director Mel Watt said it isn’t his job to worry about shareholders of the two companies, for which his agency acts as conservator.

“My responsibility in the conservatorship is not to the shareholders, really. So I don’t lay awake at night worrying about what’s fair to the shareholders,” Mr. Watt said. He went on to defend the arrangement under which the firms’ profits are swept away to the Treasury Department.

That’s a far cry from what investors thought they heard last week when they pushed shares of Fannie up nearly 10% following a speech by Mr. Watt. But it is in line with statements from both companies in public filings that they are no longer run to maximize shareholder wealth.

Perhaps Mr. Watt’s latest comments will convince investors to start taking the companies at their word on this.