Fannie Mae-No Politics (FNMA)

[hookedontonics]

just for fun...check out this post from july '10. it's been amazing to watch this all play out. i still believe most of this to be true. unfortunately, employment hasn't been the hot topic i was hoping it would be. funny. GLTA!

Original post:

IMO, assuming the call goes well next month, we should some advances.

However, until the uncertainties in the political environment take shape in November, I wouldn't be betting on a big, sustained run.

Assuming the uncertainties are removed, I think we'll be in a very good position for a significant jump in Dec. in anticipation of the administration's 'housing reform' plans which should be announced sometime in Q1 '11.

The good news is both parties want the shortest path to a recovery in the housing market. This should protect investors here as we'll most likely be in a 'lame duck' political environment. As such, I'm highly skeptical of some opinions I've seen regarding any major changes to the structure of Fannie and Freddie.

I'm highly doubtful a conservative House and Senate will be in favor of dissolving the GSE's creating a giant, very expensive, new government agency. Not to mention, that could take years to establish and would certainly eliminate the possibility of a rebound in the housing market for the foreseeable future.

More than likely, I think we'll see a new oversight committee, much smaller and less expensive, charged with stewarding the recovery of tax $$$ some of the larger banks received from Fannie and Freddie while they cleaned up their balance sheets. I expect the negotiations are already taking place and we'll see an announcement sometime in Q1 '11 similar to the Goldman deal that was recently announced. No guilt, check cut. I doubt we'll see billions of $$$ recovered. But, it will be a big enough number, $XXXM, to satisfy the media/constituencies that the issue has been addressed and we can now focus on employment which will be the hottest political topic next year (assuming 'lame duck' administation).

Everyone wins in this scenario.

I remain very bullish on this position.