jtimothyhoward - DECEMBER 30, 2021 AT 11:31 AM
Paulson was very clever in the way he forced the conservatorship
on Fannie. He was very careful (and I would say in one way dishonest)
in how he concealed his intent from the company’s Board
(the dishonesty was his telling both Fannie and Freddie that they
needed to drop their objections to HERA because that was the only
way Paulson could deliver on his promise to “preserve
[Fannie and Freddie] in their current form,”
when his true intent was to nationalize them).
Remember Paulson’s comment to President Bush that
“the first sound they’ll hear will be their heads hitting the floor.
Paulson also put a clause in HERA that exempted members of Fannie
and Freddie’s boards from lawsuits “for acquiescing or consenting
in good faith” to conservatorship. When he told the Fannie board
“there is an easy way and a hard way for me to do this, but I’m
going to do it” (I’m paraphrasing here), it was too late for
Fannie’s lobbyists to be any help. The Fannie board gave Paulson
what he wanted, which was absolute control over their company,
at stakeholders’ expense.
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