Replies to post #294740 on Fannie Mae-No Politics (FNMA)

[Mikey Mike]

According to the Sweep amendment dividends payments are mandatory...since when are DIVIDEND payments mandatory?

[10bambam]

Will not happen while the puppet board of directors is under the boot heel of Darth Vader/Watt who in turn is under the boot heel of the emporer/Treasury. Which is (among other things) what Fairholme is trying to prove in court right now. FHFA is not operating independantly.

[Sogo]

Bingo. Fiduciary duty is to conservator, not treasury. I hadn't thought of that in the way you suggest. But it makes perfect sense. The executives' fiduciary duty normally is on behalf of shareholders. But the conservator has taken the place of shareholders, ok. Well then the fiduciary duty is on behalf of the conservator, NOT the treasury. This means that since paying 100% of profits to the treasury is clearly not in the interest of conserving the GSEs (duh), the executives should be acting in the interest of the conservator, and should protest and sue treasury (basically do anything they can to not pay that sweep money). The executives actually have a legally binding duty to fight tooth and nail to protect the interest of the conservator, which means not paying the sweep and bringing suit against treasury. The execs are clearly not fulfilling their fiduciary duty. They are doing the opposite. Suing treasury would force them to defend a clearly unconstitutional sweep. Of course politics is stopping the execs from bringing suit. But when seen through the lens of what executives are legally bound to do, this action of suing the treasury is not just a no brainer, it's actually required by law that the execs try everything, every idea under the sun, in order to protect the interests of the conservator.

[trunkmonk]

That would be like refusing to be extorted, refusing the shakedown. would that now bring down one of the following on them?

replace any of the following pictured with Obama, Geithner, Demarco, Watt, Lew, or any of the retired god fathers, Paulson, Lockhart, Bernanke.



Treasury Department Announces Further Steps to Expedite(extortion) Wind Down of Fannie Mae and Freddie Mac

8/17/2012
Modifications to Preferred Stock Purchase Agreements Will Make Sure That Every Dollar of Earnings Fannie Mae and Freddie Mac Generate Will Benefit Taxpayers


Announcement Will Support the Continued Flow of Mortgage Credit
during a Responsible Transition to a Reformed Housing Finance Market

WASHINGTON -- The U.S. Department of the Treasury today announced a set of modifications to the Preferred Stock Purchase Agreements (PSPAs) between the Treasury Department and the Federal Housing Finance Agency (FHFA) as conservator of Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) that will help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market.

“With today’s announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market,” said Michael Stegman, Counselor to the Secretary of the Treasury for Housing Finance Policy. “As we continue to work toward bi-partisan housing finance reform, we are committed to putting in place measures right now that support continued access to mortgage credit for American families, promote a responsible transition, and protect taxpayer interests.”

The modifications to the PSPAs announced today are consistent with FHFA’s strategic plan for the conservatorship of Fannie Mae and Freddie Mac that it released in February 2012. The modifications include the following key components:

Accelerated Wind Down of the Retained Mortgage Investment Portfolios at Fannie Mae and Freddie Mac

The agreements require an accelerated reduction of Fannie Mae and Freddie Mac’s investment portfolios. Those portfolios will now be wound down at an annual rate of 15 percent – an increase from the 10 percent annual reduction required in the previous agreements. As a result of this change, the GSEs’ investment portfolios must be reduced to the $250 billion target set in the previous agreements four years earlier than previously scheduled.

Annual Taxpayer Protection Plan
To support a thoughtfully managed wind down, the agreements require that on an annual basis, each GSE will – under the direction of their conservator, the Federal Housing Finance Agency – submit a plan to Treasury on its actions to reduce taxpayer exposure to mortgage credit risk for both its guarantee book of business and retained investment portfolio.

Full Income Sweep of All Future Fannie Mae and Freddie Mac Earnings to Benefit Taxpayers for Their Investment

The agreements will replace the 10 percent dividend payments made to Treasury on its preferred stock investments in Fannie Mae and Freddie Mac with a quarterly sweep of every dollar of profit that each firm earns going forward.

This will help achieve several important objectives, including:

· Making sure that every dollar of earnings that Fannie Mae and Freddie Mac generate will be used to benefit taxpayers for their investment in those firms.
· Ending the circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury.
· Acting upon the commitment made in the Administration’s 2011 White Paper that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market in their prior form.
· Supporting the continued flow of mortgage credit by providing borrowers, market participants, and taxpayers with additional confidence in the ability of the GSEs to meet their commitments while operating under conservatorship.
· Providing greater market certainty regarding the financial strength of the GSEs.