Replies to post #292546 on Fannie Mae-No Politics (FNMA)

[955]

Hats off to Tim Pagliara for writing this article, but he comes across as being way to lenient with the criminals that perpetrated this dastardly scheme of blatant theft of taxpayer private property. As the real Tim Howard so aptly pointed out in his 8 page rebuttal of Treasury and the conservatorship, "The goal of this instrument (PSPA Third Amendment Sweep) was not to aid the two companies, but to push them into insolvency and keep them there (p.3). Treasury’s September 7, 2008 nationalization of Fannie Mae and Freddie Mac was planned well in advance (p.3). http://investorshub.advfn.com/boards/read_msg.aspx?message_id=111573294

Fannie Mae’s situation was totally different. In the winter of 2000, it had agreed with Treasury, and pledged publicly, to maintain sufficient liquidity to enable it to survive at least three months without access to the debt markets. As a consequence of this pledge—to which it had adhered—unlike all of the other companies rescued by the Fed or the Treasury during the crisis, Fannie Mae never experienced a threat to its solvency because of difficulty rolling over its maturing debt, nor did it need to sell assets at depressed prices to survive. The company never experienced a market crisis. At the time it was put into conservatorship, Fannie Mae’s capital significantly exceeded its regulatory minimum. Fannie Mae’s “rescue” was a policy choice by Treasury, with its timing determined by Paulson. As he said in
On The Brink, he wanted to put Fannie Mae and Freddie Mac in conservatorship before Lehman Brothers announced a “dreadful loss” for the second quarter of 2008.

After the companies were placed in conservatorship, the mechanism Treasury used to extend credit to them—“draws” of non-repayable senior preferred stock to make up for book capital shortfalls—was one developed specifically for Fannie Mae and Freddie Mac. No other regulator in the world, at any time or under any set of circumstances, ever had used non-repayable senior preferred stock, paid with after-
2

tax dollars, as a vehicle for rescuing a financial institution in crisis (or for any other purpose).

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=111573294

http://thehill.com/blogs/congress-blog/economy-budget/235404-governments-sweep-of-fannie-and-freddie-profits-puts