Fannie Mae-No Politics (FNMA)

[TII]

Thanks for the heads up on this event. I hope it will be webcast like most of their events.

I want to see what Bob Ryan, Acting Deputy Director of the Division of Conservatorship, FHFA has to say. He doesn't speak much, but he is a bigger player in the conservatorship than most realize, at least imo. My guess is Watt relies on him quite a bit. I've always thought he didn't think it was necessary to completely do away with FnF, just make some of the behind the scenes reform moves that we are seeing. His thoughts on reform include...

1. QM...strong underwriting and defined credit box....done/working on.

2. Build Capital...4-5%, maybe less with the current quality of loans FnF are doing now. Cap. requirement should not be legislated. They should be set by the regulator. (Hopefully this step happens soon.)

3. Make it an explicit guarantee and set up an insurance fund. (I'm OK with that as long as it doesn't eliminate FnF, let them pay a % for the govt. guarantee.)

4. Reduce/eliminate investment portfolios. No problem with that as long as they don't give them away to Wall Street for pennies. Get the true value out of them.

5. Strong, independent, transparent regulator. I'm okay with that, as long as it is truly independent and transparent. With our congress and BO, not sure it's gonna happen though.

6. More competition in the guarantor space. Working on that now with CSP. As long as FnF get fair value for what they rightfully own. I'm still very concerned they will get it away for free or pennies on the dollar because they fell they need to be aggressive in getting other players competing with FnF.

I'll be interested to see what Ryan (and others) have to say about these topics. It should be a good barometer of where we are headed and how much input he actually has with Watt's plan (although whatever happens to FnF is really not Watt's plan, it's just whatever the folks that have his ear convince him to do.) for FnF over the last few years and moving forward.