Fannie Mae-No Politics (FNMA)

[obiterdictum]

There is no repayment required. There is no loan or subsidy made.

The agreement under the conservatorship is for the GSEs to pay dividends and quarterly fees for senior preferred stock purchased and then liquidated by the FHFA/US Department of Treasury.

This is happening in a far far better manner than the US Treasury, FHFA and the Congress expected. In fact it is becoming an embarassment to them since the hated and reviled GSEs blamed for so much economic havoc are turning out tremendous company profits while paying in huge dividends per the agreement. They are working out and this is not what was expected.

The issue is what now to do with these successful independent companies that were made the scapegoat by politicians on both sides of the aisle and greedy investment bankers whose lax political (Congressional) oversight and regulation and fraudulent banking practices contributed greatly to a devasting recession. They cannot kick the GSEs around anymore and now how will they deflect scrutiny on their failures. The banks are catching hell now. Next is the politicians.

Tim Mayopoulos, CEO of Fannie clearly states the central issue as ending the debate for the government to replace Fannie Mae and to come up with a clear solution rather than hanging the GSEs up with inaction.

He says, "I'm not sure if it will happen sooner rather than later. I do think there is a risk that I think people should not accept, but there is a risk that policymakers will look at our profitability and say we don't need to act on this soon. I think that would be a mistake. There needs to be clarity about what the future of the housing finance system is going to be. I think the sooner we get there, the sooner private capital is likely to come back to this market."

Source:http://www.safehaven.com/article/29459/fannie-mae-ceo-us-taxpayers-could-profit-from-bailout
http://www.fhfa.gov/Default.aspx?Page=364