Fannie Mae-No Politics (FNMA)

[davidam]

here is a good post with some good info on that topic

McInc Saturday, June 01, 2013 2:34:58 PM
Re: Rjrcortes post# 51256 Post # of 66313

Corker's proposal is not something new, it mirrors a few that were drawn up 10 or 20 years ago.. People have long forgotten about them..'coz they didn't go anywhere and GSEs remain as they are - the public-private model, just like they have been for decades.


June-August period, gonna be game changer for Fannie & Freddie.
and that's why it has been so volatile and violent lately, especially when they both hit the significant $5/sh mark.

www.housingwire.com/news/2013/03/14/senators-warren-corker-reach-across-aisle-gse-reform

it's funny that share price of Fannie and Freddie started rallying exactly around the time this hit the wire..did the market know something ppl. didn't know? one thing's for sure though, market is always correct, period.

"If Congress uses guarantee-fee hikes to fund other programs, it will eventually become impossible to reform the GSEs—an initiative that has bipartisan support, Sen. Corker pointed out."
--- well, too bad, the Gov. is already using the fees generated from these two cash cows to fund their programs and to reduce deficit.. Corker should know better his move is doomed anyway (but of course, like any politician, he will play dumb and pretend he doesn't know just to save his political face..lol).. c'mon, ppl. you all should know better that politicians are just puppets, they have NO real power, PEOPLE WITH DEEP POCKETS have power, and people with deep pockets want Fannie and Freddie freed.

"If Treasury were to decide to sell its preferred share investment without Congress having first reformed our housing sector, we would just be returning to a time where gains are for private shareholders and losses are for taxpayers," said Corker."
--- this is gonna come back and slap right in his face when F&F pay back all taxpayers' money in dividends and some more.. and the market cap. for both companies rise to a level that Treasury's stakes in these two are guaranteed to make hundreds of billions of dollars for taxpayers (already proposed by some hedge funds who are willing to pay close to $200 Billion for Treasury's shares)

http://www.corker.senate.gov/public/index.cfm/2013/4/corker-says-fannie-and-freddie-income-no-excuse-for-inaction-housing-finance-reform-still-needed
"I’m glad Fannie Mae is showing an increase in income, but we have to remember that this is largely because we have crowded out private capital and made Fannie or Freddie the only viable execution option for new loans. So while I am hopeful that taxpayers can quickly be repaid for their investment in the GSEs, we must focus now on building a more sustainable 21st century system of housing finance that restores the private mortgage market after years of government dominance. I hope Congress will take the necessary steps to ensure housing finance reform can happen as soon as possible,” said Corker."
---- now less than a month later he's become hopeful that "taxpayers can quickly be repaid", such a contrast against his previous argument.. he knows his proposal is gonna be fucked, very weak case to make in any place, only gonna get even weaker as Fannie&Freddie market cap. appreciate.."sustainable 21st century system of housing finance", the GSEs have existed for decades, nobody's gonna listen to what he says.. just noises after all:

http://www.cato.org/publications/policy-analysis/mounting-case-privatizing-fannie-mae-freddie-mac

as you can see, the concerns for Fannie/Freddie's quasi-governmental status have been around for a long long long ass time..and guess what has happened? NOTHING! NOTHING has ever happened. GSEs remain as they are because after decades of experience, they ARE the best way to run the housing market in this country, period.
those noises around winding down F&F are mostly based on a scenario that should a crisis take place, GSEs would "cost taxpayers" mounting losses..
BUT, the truth(fact) is: taxpayers didn't "bail them out" in the '08 crisis, they "invested" in these GSEs at a good timing, just like how smart money works on Wall Street - BUY LOW, SELL HIGH! Taxpayers bought interests in these two companies during a crisis that represented huge financial opportunity for them, and years later, they are raking in hundreds of billions of dollars in profit, while improving the economy, their overall wealth, and well-being at the same time..
this is the American Way that everyone in this country should be proud of. Nothing can get better than this!
Corker et al. have no chance. their proposal will end up just like this article -- some 16 years later and nobody barely remembers...

Corker argues that the system is "flawed" and his proposal is better than decades of GSE experience;
Can Corker or ANY POLITICIAN guarantee that there will no more housing crises if Fannie&Freddie are wound down like they proposed (even though in their proposal they don't even know HOW EXACTLY are they going to do that to a 10-trillion dollar entity - without any disruption to the market or economy or the public interest)?? anyone with a slightest knowledge in economics should know that housing market moves in cycles just like any other markets: there are good time, and there are bad times, it's just natural, it's in the structure of Capitalism (and Corker wants to start a REVOLUTION on Capitalism! hello? is he crazy? ).
Corker then argues that GSEs bring losses to taxpayers..
now this one is even better, 'coz in Fannie and Freddie's case, shareholders hold the strongest claim: it WAS NEVER a mistake for taxpayers to invest(or bail-out) in GSEs during the housing crisis - with implicit guarantee from the U.S. government, it was the best INVESTMENT ever for taxpayers; in fact, the bigger the crisis, the bigger the eventual profits for them..
for a very simple reason: the U.S. Government has practically monopolized this market with close to zero risk and unlimited reward; and Corker is saying that Uncle Sam should not make money like this...
LOL, I think it's fair to say that Uncle Sam will not let Corker et al. have their way.. and whenever Uncle Sam wants something, there should NEVER BE QUESTIONS ASKED!
taxpayers will profit in hundreds of billions of dollars from their investment in Fannie and Freddie - it's a guarantee!

Corker's proposal is a nightmare, will only create more chaos and uncertainties for the housing market, he's the true enemy to taxpayers.
let's just wait until Mel Watt's nomination is confirmed..
http://articles.washingtonpost.com/2013-05-01/business/38957583_1_fannie-and-freddie-housing-market-freddie-mac

"As a North Carolina congressman, Mel Watt has tried to arm struggling homeowners with a legal “sledgehammer” against lenders and expand the ranks of people eligible to cut their mortgage principal. Democrats, including those who serve on the House Financial Services Committee, the panel handling housing issues, said he will advocate a balance between public and private support for homeownership.

Those positions help explain why President Barack Obama has nominated Watt, a Democrat, to oversee Fannie Mae (FNMA) and Freddie Mac, the mortgage companies seized by the government in 2008. They also underscore Watt’s uphill climb to gain support from the Senate Republicans he’ll need to win confirmation.

When the Banking Committee takes up his nomination as early as next month (June), “All I’d be asking for is a fair shot and consideration of not labels but experiences,” Watt said. "

"To win the 60 votes needed for confirmation, Watt must gain support from at least five Republicans if he’s backed by all 55 senators who caucus with the Democrats. So far, Senator Richard Burr of North Carolina has been the only Republican to back him.

Democrats are reaching out to Republicans from states with high foreclosure rates in the hope that some of them will break ranks."

4 more Republicans and Corker will be kicking himself..lol


putting together all these pieces, you should be smart enough to understand why big money (working with market makers and operators) are buying into shares of Fannie&Freddie (preferred or common, they move together since their values and fate are so closely tied up), and why politicians, hedge funds, banks et al. are lobbying so hard for the eventual release of these two housing giants.
bottom line, in America, Wall Street ALWAYS wins;
we're not China or North Korea or Cuba or sth.. We are the Symbol of Capitalism..
Washington has no chance against Wall Street, market will dictate their action, and market WILL TELL THEM WHAT TO DO.
period.

GLTA