Fannie Mae-No Politics (FNMA)

[Vancmike]

Below is a letter I sent to several conservative news reporters. It includes comments and helpful posts from many, so thanks. Please change and modify for your own use and send to whom you think may pick up the story. yes, it is a bit long as it is hard to summarize. Good luck to all of us in 2023.

Date: __________

To: ______________

Subject: Biggest US Government theft and no one is covering the story

Please bring this story to light. The taking of private property in violation of the 5th Amendment of the United States Constitution. A clear case of government self-dealing, fraud, lies, and corruption.

The US government has taken more than $300 billion dollars from the GSEs. No news organization is covering the story and the on-going court cases. This has affected more than one hundred thousand investors and millions more that held the stock in mutual funds and pension funds, along with Fannie Mae & Freddie Mac employees 401ks.

The big lies perpetuated by the government:

1) FNMA & FMCC caused the great recession. (False, FNMA & FMCC didn’t make loans, banks did)
2) The GSEs needed a bailout. (False, the GSEs had enough cash at the time of the takeover)
3) The GSEs were in a death spiral (False, The GSEs provided positive projections at time of the NWS)
4) Only greedy hedge funds will benefit from litigation. (False, millions owned the stock)

The NWS (Net Worth Sweep) was designed to keep GSEs in the chains of conservatorship without ability to recover in profitability and be able to be released.

One issue many in congress have tried to address, is the matter of housing finance reform and the corrupt mess with the FHFA (Federal Housing Finance Administration) relative to their oversight of the GSEs (Government Sponsored Enterprises), Fannie Mae (FNMA) and Freddie Mac (FMCC). The apparent fraud and injustice has been on-going for more than fourteen years; wiping out retirement funds of many citizens. FHFA has diminished the value of FNMA and FMCC stocks, affecting over one hundred thousand stock holders that have relied on the dividends to supplement their retirement. Thus, our ownership rights were stolen by the US government.

This has also affected the cost of home mortgages. Before the conservatorship of the GSEs the average guarantee loan fee on home loans was 25 basis points. Today it's nearly 2x as much, hovering around 56 basis points, representing a hidden tax.

There are numerous documents, court filings, and articles written about this travesty of justice. These can be found at https://gselinks.com . A brief summary below:
A. FNMA and FMCC were profitable operating companies that did not need to be placed in conservatorship. The GSEs had over $60 billion dollars in cash and would have weathered the economic head winds. In 2008, Henry Paulson, Treasury Secretary, orchestrated the conservatorship under duress. Quoting from Henry Paulson’s book, On the Brink, “The board of directors won’t know what hit them until their heads hit the floor.” He then placed $187 billion dollars of toxic assets on FNMA and FMCC books, forcing them to take a $187 billion dollar loan, at ten percent interest, 10%, while banks were charged four percent, 4%. Forcing them to take a $187 billion dollar loan permitted Treasury Secretary Henry Paulson to Quote; “We had to Nationalize them.” Then the Treasury issued themselves warrants to purchase 79.9% of the companies, for practically nothing.
B. In 2012, the real estate market turned around and the GSEs had reported their projections with a return to profitability for the foreseeable future.
C. Ed DeMarco, Acting Director, FHFA, an unelected bureaucrat never approved by the Senate, stated in court he consulted no one in his decision to implement the “Net Worth Sweep”. Changing the GSE’s contract loan from ten percent, 10%, to one hundred percent, 100%, of their net worth in perpetuity, with no way of repaying their loan. (Isn’t there usury laws against this?) Additionally, for every dollar the GSEs make, the Liquidation Preference increases by a corresponding dollar amount. There are over eleven thousand related emails and documents unreleased and hidden from the public under Presidential seal by President Obama. The few documents released in court, highlight the planned theft by the Obama administration.

D. As of mid-2022, the GSEs have repaid “$385 billion dollars!!” against the cumulative loan of “$191 billion dollars!!” and yet they remain in conservatorship and the loan principal has not been reduced. “A $194 billion dollar profit for the treasury.”

Nationalization of the GSEs is a violation of the fifth amendment of the U.S. constitution, “a takings without compensation”. Shareholders have received nothing. Key comments in court and congressional hearings:

1) Federal Judge Margaret Sweeney called this a “mafia style loan”.
2) Federal Judge Edith Hollan Jones said the treasury has been compensated like a “Pay Day Lender”.
3) Federal Judge Janice Rogers Brown, wrote, this was an act of “a banana republic.”
4) Former FHFA Director Mel Watt; “The Law was trumped before I got there”
5) Former US Congressman Mike Capuano; “The shareholders of FMNA & FMCC have been screwed for years unnecessarily. Fannie Mae & Freddie Mac have paid back three times over”.
6) Former FHFA director Mark Calabria, who drafted HERA quote, “Ed DeMarco should be standing in front of a judge.” In regards to the Net Worth Sweep, for subverting HERA and the law.
7) Supreme Court Justice Sotomayor - "For no rational reason, FHFA sold all of Fannie and Freddie's assets, in exchange for $1.00, to itself. It did exactly what Justice Breyer said, it nationalized things. It nationalized the companies."
8) Supreme Court Justice Breyer’s comment “This is a takings case.” “They say nationalization is not the kind of thing conservators and receivers do and, therefore, you can examine it. And when you examine it, you will see how unreasonable it is.”

Over a hundred thousand shareholders, including myself, have been wronged. We are requesting administrative action to declare the GSEs loan paid, eliminate the warrants, and zero out the liquidation preference.

End the Conservatorship

The fraud and corruption are replete. The DOJ has spent fourteen years while spending an estimated $100 million dollars in legal fees to keep this theft from being exposed. The DOJ putting forth legal technicalities and minutiae in their battle, does not make it right. HERA (Housing Economic Recovery Act) is bad legislation.

Fannie Mae has worked well since its inception in 1938. Reform is not needed. FNMA earns approximately $16 billion dollars net profit each year and far exceeds the Dodd-Frank required stress test, in the worst-case scenario. It is overdue to release Fannie Mae and Freddie Mac from the chains of conservatorship. This is a simple decision by FHFA and the Treasury to release them. Congress needs to mandate them to do so. There are currently numerous law suits on-going, highly contested by the DOJ. We the ordinary people, need representation against this injustice.

I would be pleased to discuss this issue at your convenience.

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