From a commenter in Tim Howard's blog,
ptashner said:
January 27, 2015 at 2:36 pm
.
The recurring theme oft repeated was “under capitalized.” Slight paraphrasing follows:
Mr. Leutkemeyer (MO): “How do you build capital?” Mr. Watt “we can’t build capital due to PSPA.”
Mr. Duffy (WI): “If GSE’s are undercapitalized how can they fund Trust Fund?” Mr. Watt “under conservatorship GSE’s don’t have capital as it’s all swept to Treasury.”
Mr. Duffy, “Are GSE’s undercapitalized?” Mr. Watt “PSPA’s trump the law (HERA).”
Mr. Mulvaney (SC): “Is Fannie stable?” Mr. Watt “We think it is”. Mr. Mulvaney: “if undercapitalized, how does agreement with Treasury trump the law?” “Agreement between one agency and another can’t trump the law.”
Mr. Pierce (NM): “Someday FnF will be out of conservatorship.” These government “agencies are WAY undercapitalized.” Worried FHFA may be independent from Administration but not from Congress.
Mr. Barr (KY): Typical bank has 10-1 capital ratio, Fannie is 341-1 Freddie is 153-1, “if adequately capitalized why are they still under conservatorship?”
Mr. Williams: “What is Treasury doing with money received from GSE’s?” Mr. Watt: “I don’t know. Treasury uses it as they decide. Should it be used against deficit or general fund, or used to buildup capital in GSE’s?”
Mr. Poliquin (MA): “Dodd-Frank requires non-government entities to hold substantial capital. Don’t you think FnF should hold large capital reserves? FnF do not abide by capital requirements we require of other financial institutions. FnF are GROSSLY UNDERCAPITALIZED.” Mr. Watt: “I didn’t set up PSPA, I have to live with it. Everything you talked about you can change.” Mr. Poliquin: “I’m very concerned by large enterprises being under capitalized.”
My comment to our elected representatives in Congress: Recapitalize (end the sweep). Release. Relist. Return to hard working Americans who are taxpayers and shareholders.
