Guido, I agree with some of what Tilson has to say, but I can't decide if his spin on it is ignorance or intentional. These are my thoughts in response to the interview:
• Fannie Mae and Freddie Mac never needed the full $191.4 billion they were forced to take, and have paid Treasury back that amount plus $110 billion more.
• Much of the original losses were accounting maneuvers—non-cash charges that were later reversed or proven unnecessary.
• In 2012, Fannie Mae and Freddie Mac became profitable, and in August 2012, is when President Obama and the Department of the Treasury enacted the Net Worth Sweep, which took 100% of Fannie Mae and Freddie Mac’s profits. The Net Worth Sweep (2012–2019): This "Third Amendment" replaced the 10% rate with a variable dividend equal to the companies' entire net worth. Between December 31, 2012, and June 30, 2019, this specific mechanism moved $242 billion from the GSEs' balance sheets into Treasury coffers.
• Previous to Mark Calabria’s change to Fannie Mae and Freddie Mac’s minimum capital requirement of 4.08%, the minimum capital requirement was 2.5%. It needs to be changed back to 2.5%
• An additional conversion of 25% (takings) mentioned in the video is ludicrous.
• The government paid less than $100K for 79.99% for the warrants of these two multi-billion dollar companies, which the government brokered after forcing the companies to take $191.4 billion and didn’t need.
• There was a consolidated class action lawsuit brought by private shareholders of Fannie Mae and Freddie Mac. They challenged the "Net Worth Sweep"—a 2012 amendment to the government's bailout agreement. The 8-0 Unanimous jury vote refers to the landmark verdict reached on August 14, 2023, in the case of Berkley Insurance Co. v. Federal Housing Finance Agency (FHFA). This trial took place in the U.S. District Court for the District of Columbia under Judge Royce C. Lamberth. As of March 14, 2025, Judge Lamberth denied the government's motion to overturn the verdict, ruling that the jury had "ample evidence" to conclude the Net Worth Sweep caused ongoing harm to shareholders. The government is expected to continue the appeals process in the D.C. Circuit Court of Appeals
• What about the taxpayers, common shareholders, who bought Fannie Mae and Freddie Mac previous to the conservatorship, when the Associated Press put out this statement, ‘Treasury Secretary Henry Paulson sought for the second straight day to calm investors panicked about the financial state of Fannie Mae and Freddie Mac, saying the agency aims to keep the mortgage finance companies ‘in their current form’ without a government takeover.’ Soon after this, the government placed them in conservatorship, effectively causing the stock to drop to near zero. 18 years later, the stock price has still not recovered due to the confiscation of their profits. To say they would be handing a six-bagger win to common shareholders is disingenuous and insulting to the many shareholder taxpayers who have been invested in this for many years, some even before the 2008 conservatorship.
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