Fannie Mae-No Politics (FNMA)

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What We’re Hearing: Perella Weinberg, the Treasury’s GSE Advisor ?

Balancing the Congressional Equation

Calabria’s Plan of Action ?

Wiping Out $200 Billion

IMFnews - Friday, May 3, 2019 - By Paul Muolo



Now that the Treasury Department is feverishly working on its housing finance reform plan, the next logical step entails picking advisors to assist the government as it tries to solve the problem known as Fannie Mae and Freddie Mac. For months we’ve been hearing that Perella Weinberg Partners would get the job but we’ve also heard that Goldman Sachs and Morgan Stanley might prove logical choices. Perella might have a leg up on the competition because it served Uncle Sam well (then known as Wasserstein Perella & Co.) with fixing the mess known as General Motors. Then again, Goldman seems to serve as an AAA affiliate for the White House, which represents the bigs…

We stress that nothing has been decided when it comes to Treasury picking an advisor(s). But one would assume an RFP would be sent out…

One GSE observer told IMFnews that he believes the Treasury Department, to some degree, will be constrained on what it does because it has to worry about ticking off Congress. “I do think Treasury has a clear picture of what it wants.” Another problem surrounds investment banking/advisory fees the private sector can earn from a potential recap-and-release plan. The payday will be large and Democrats (and even some Republicans) might blanch at the bill. Then again, this is Fannie and Freddie…

In a new report on GSE reform, analyst Jaret Seiberg writes: “Our view

remains that Mark Calabria not only took over FHFA with a plan of action but also has

demonstrated in just a few short weeks that he understands the need

for momentum out of the gate.”

On May 14 the FHFA director will be the keynote speaker at the National Association of Realtors' regulatory issues forum in Washington…

The Cowen analyst adds later in the report:

“The other issue that Calabria could begin tackling this year is the question of how to handle the nearly $200 billion in preferred stock that the government holds in Fannie and Freddie.

We disagree with those who believe the government will simply deem that repaid.

That is politically inconceivable as it would be played as taking $200 billion from taxpayers and giving it to Wall Street hedge funds. The questions about the appropriateness of the sweep will get lost in these attacks.”