Fannie Mae-No Politics (FNMA)

[obiterdictum]

So if c-ship ends, does FHFA become the permanent regulator of the GSEs with just the mission to regulate the entities?

If Fannie Mae and Freddie Mac are considered regulated entities (federally chartered Government Sponsored Enterprises) post-conservatorship and there is no amending or repealing of HERA, then the FHFA will be the regulator (not conservator) of the GSEs.

Will parts of HERA continue after the conservatorship ends?

If Fannie and Freddie are deemed regulated entities, yes.

What will be the power of the future head of FHFA over Fannie and Freddie post-conservatorship?

The scope of power, authority, and duties of the regulator are too many to summarize here. You can review all of those in Title 12 USC, Chapter 46, Subchapter I, Part A, § 4511-4526. Click next to view and review each section.

http://www.law.cornell.edu/uscode/text/12/4511

You can view the same here and with greater detail on amendments and changes.

http://uscodebeta.house.gov/view.xhtml;jsessionid=1F3B2FF316B3085A405CB35A47C85E03?req=granuleid%3AUSC-prelim-title12-chapter46-subchapter1-partA&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGUxMi1zZWN0aW9uNDUxOQ%3D%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim

Say, Fannie and Freddie aren't in conservatorship anymore and Watt becomes the regulator. Then he has to deal with two private entities. Treasury exercises its warrants and the government becomes the majority stakeholder. But later on Treasury changes hand for Republicans. Being the largest shareholder with majority voting rights how much influence could Watt enforce unto a Rep. Treasury?

The FHFA is an independent federal agency with an independent regulator and neither need to follow the US Treasury in a post-conservatorship world. Existing contractual agreements (PSPAs), if left standing after judicial reviews and rulings, these agreements will entitle the US Treasury to whatever is in those still standing agreements.

What Watt does is determined by the well spring of his familial, political, economic, financial, social and moral background and experience and the external influences and conditions he will face. He is not beholden to any other person or agency. What he does is up to him and what he allows to push and pull him internally as a person and externally from others and circumstances.

Something looks wrong in the above *politicized* picture (for democrats).

Assumptions...

The strong push to get Watt in there must be to make sure:

* conservatorship never ends (unless for a court order).
* warrants, if exercised, are fully sold within Obama's term. Tsy not a shareholder anymore. Alleviates risk of a Rep. Treasury influence.
* warrants not exercised and disposed to prevent a future scenario where Reps could have their say via a Treasury shareholder.

* The conservatorship by law is temporary so it must end at some point in time. When? I do not know.
* Yes. Past actions of the US Treasury indicate a pattern of stock and warrant liquidation.

Preferred Stock Auctions
http://www.treasury.gov/initiatives/financial-stability/TARP-Programs/bank-investment-programs/cap/Pages/Preferred-Stock-Auctions.aspx

Warrant Auctions
http://www.treasury.gov/initiatives/financial-stability/reports/Pages/Warrant-Disposition-Reports.aspx

* The US Treasury as majority shareholder is not useful to the US Treasury and there is no reason other than to achieve a positive return on investment. Liquidation of positions is the pattern.

See AIG Timeline of Common Stock Liquidation
http://www.treasury.gov/initiatives/financial-stability/TARP-Programs/aig/Documents/20121212_AIG_v8.jpg

However, it is clear from the AIG and other examples that time and timing is a factor.