Below are parts of a letter I sent to the U.S. House Subcommittee on Capital Markets (Republican members). I hope they read it and use some of it during the hearing today.
February 18, 2023
To: U.S. House Subcommittee on Capital Markets (Republican members)
Subject: Wrongful Conservatorship of Fannie Mae (FNMA) and Freddie Mac (FMCC)
I once worked for a wise manager who often stated, “You can never go wrong doing the right thing”. This bit of wisdom is important to live by, including resolving current issues propagated by those in our government. Our government should be held to a higher standard and be the example of “doing the right thing”. It is a shame citizens have to fight in the courts with the DOJ over legal technicalities and semantics.
The wrongful conservatorship of the FNMA and FMCC has been ongoing for fifteen years and the treasury department has “taken” over $300 billion dollars from FNMA and FMCC as repayment against an original $189 billion dollar loan commitment. The treasury department has been fully compensated years ago. Ms. Sandra Thompson, Director of FHFA, has commented on numerous occasions, she is waiting for congress to act. In other words, she wants congress to tell her what to do. It is time for congress to order the release Fannie Mae and Freddie Mac from conservatorship!
From the attached letter by former President Trump to Senator Rand Paul, “The idea that the government can steal money from its citizens is socialism and is a travesty brought to you by the Obama/Biden administration”.
One of the most egregious acts was the 3rd amendment which changed the terms of the conservatorship. This 3rd amendment is better known as the “Net Worth Sweep”. It was drafted and implemented by acting FHFA director, Ed DeMarco. This 3rd amendment changed the 10% repayment term to 100% net worth of FNMA and FMCC. Worse yet, these payments would continue every quarter in perpetuity. It was intended to prevent Fannie & Freddie from building retained earnings and exiting conservatorship.
The future of the Secondary Mortgage Markets in the United States is a Major Question of Economic and Political Importance, which should be decided by our Elected Representatives. Ed DeMarco, Acting Director of FHFA, an unelected bureaucrat, never approved by the Senate, admitted under oath in court, that he never consulted anyone in his decision to draft and implement the “Net Worth Sweep”. Emails presented in judge Margaret Sweeney's federal court as evidence from Treasury department indicate otherwise. Did Ed DeMarco commit perjury?
The Treasury department issued itself warrants as collateral at the time of the conservatorship to ensure payment. Full payment has been received and warrants should be null and void.
Action requested: Congress needs to direct Ms. Sandra Thompson, Director of FHFA, to agree with the treasury department the loan has been paid and has been fully compensated, therefore eliminate the senior preferred stock agreement, eliminate the warrants and zero out liquidation preference. By consent decree release Fannie Mae and Freddie Mac from conservatorship. The ending of the conservatorship will eliminate all lawsuits and allow Fannie Mae and Freddie Mac to operate as private companies with oversight and regulation from FHFA.
FNMA released it’s 2022 annual 10K report on February 14, 2023. FNMA reports a $12.8 billion dollar profit and $60.3 billion dollars net worth. The company is profitable with an operating margin of 18.25%. FNMA has the financial health to stand on its own. FNMA has never been in better financial health.
