“There are funds that have taken very large positions, large hedge funds, and they are lobbying heavily,” Senator Bob Corker, a Tennessee Republican, said in an interview, declining to confirm any names. “I don’t give investment advice, but I don’t see how these are going to be worth anything down the road.”
Under the bailout’s terms, there’s no mechanism for the enterprises to exit conservatorship. Neither Fannie Mae nor Freddie Mac can build capital because Treasury takes virtually all of their quarterly profits.
“I tell them it’s a lottery ticket at best,” Corker said. “I just don’t see any appetite in Congress for Fannie and Freddie ever being returned to the private market.”
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