Fannie Mae-No Politics (FNMA)

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Taxpayers, Freddie Mac and Fannie Mae winners in the long runTaxpayers, Freddie Mac and Fannie Mae winners in the long run Jennifer [e-mail]06 October 2014, 13:18See other articles of same Writer! 25.09.2014 - Action of the US President against ‘inversions’ of corporate tax is only a quick-fix Share Fannie Mae and Freddie Mac, the leading names in the housing finance sector are set to continue in institutional oblivion (and under the rule of the Federal Housing Finance Agency or FHFA) in anticipation of an upcoming decision by Congress. The companies that went bust six years ago are waiting for Congress’ decision to replace the existing two housing finance entities with a whole new setup. Though the ensuing insecurity was bad for the entire housing sector, the situation could have been far worse in that hedge funds management could have taken advantage of the situation and tried to convince a Federal Judge to handover the once-again profitable mortgage entities over to them.



Taxpayers, Freddie Mac and Fannie Mae winners in the long run


The Ruling by the Washington court

The recent ruling by Judge Lamberth prevented such an outcome from becoming a reality. On Tuesday, the Washington based US District Court rejected the lawsuit filed by a group of private investors. These private investors had been trying very hard to translate their outstanding minority pledges in the two companies into a billion dollar one-off profit. They tried to remodel the bailout of Fannie Mae and Freddie Mac – which was one of the many governmental measures responsible for saving American free market trade and private enterprise - as a significant attack on their rights to property.

Accordingly, this group of Wall Street plungers put up the theory that their stock values had been diminished by the 2012 agreement between FHFA and the country’s Treasury Department. The agreement promises all future incomes of the two entities into the hands of the government instead of private investors and hedge funds. At the same time, it is a known fact that many of these funds had bought shares of the companies at extremely low prices during the post-bailout sale.

Judge rules in favor of the Treasury and FHFA

In the fifty-two page long judgment by the US District Judge, the Judge not only dismissed the claim of the hedge funds and private investors that various Federal departments had exceeded their constitutional authority, but also provided a close interpretation of the 2008 law. Accordingly, the 2008 law not only grants complete rights to the Treasury and Federal regulators over the two housing giants and their revenue streams but also expressly abnegates from the courts of the country practically any authority to review the actions of the said agencies. Likewise, the Judge, in his observation has made known that in reality the plaintiffs were unhappy with the measures taken by the two agencies in saving the two institutions from an impending collapse, which would have triggered a complete panic.

The judge’s ruling does not bring the whole housing finance saga to an end, because the plaintiffs in this case are already planning to appeal this decision, with many similar cases still pending in other parts of the country. It is the duty of Congress now to pass a stable and permanent solution to the problem so that the country’s stultified housing finance setup can be revitalized once again.
http://www.dailynewsen.com/taxpayers-freddie-mac-and-fannie-mae-winners-in-the-long-run-article,28.html