yank , here you go again.
1. The gse's kept saying in the 10ks all the way up to 2012 , that past earnings history would have never paid the 10% interest. Yet net interest income was exceeding 2007 levels every year of the conservator regime.
2. Of course that was disguised in 2008 and 2009 by running record non-cash losses through the income statement to account for future recessions that never happened. Of course it's those phony losses in 2009 that run up the 10% hurdle that's so difficult to meet in the first place in 2012!....."we will charge you 10% interest on money you might
need 15 years in the future- you do not get to keep in capital but in loss reserves earning 1%. Then surprise it turned out you didn't need it right after we implement the net worth sweep. Gee , what a lucky coincidence for us-Usa Treasury!
3. Loan to value metrics , any ratio you want to look at were pristine in loan years 2009, 2010, it even says so in the 10k. Performance of those loan books speak for themselves. I know you are going to talk about stress results done by the very people who let the horse out in the first ,making a big show out of slamming the barn door tightly for next time.
4. You do not mark to market held to maturity items, that's true for the Gse's and for banks. You look at the problem loans on the books ( likelihood of default)and come with an estimate for how much you lose based on the mortgage insurance coverage ahead of you and property prices in the area. By 2012 , loss severity ratios were under 45 % even on defaulted loans.
5. No Bank, Insurance company "lost " anywhere near what the twins lost in 2008 , 2009. Of course no company made back anywhere near what the gse's made back in 2013. When the results are that wildly different compared to other peer companies of course the accounting needs to be examined. It's just common sense!
6. Real losses are charge -offs , they are not write downs of Dta's and "Pretend the second hundred year flood will happen twice twice in five years" loss reserves. If you are going to reserve for floods all banks get the same treatment not just the Gse's that you are charging 10% for!
7. In 2010 Fannie Mae had 76 billion in loss reserves and Freddie had 60 billion. Enough to cover 3 years of defaults from the greatest drop in housing in the history of this country! Go through those loss books and explain why ! Also note that they had record net interest margins to further build those loss reserves should any further drop ( however unlikely) start happening!
8. These are the questions of the auditors the plaintiffs want answers to!
