interesting post. The video clip with Buffett was very short and interestingly timed. What I drew from it was :
1. We need the 30 year mortgage and this needs to be gov't sponsored and regulated ( sounds like a GSE utility model proposal? ). This is favorable.
2. It was difficult in the previous GSE model to serve 2 masters ( Wall street and institutional stockholders and the gov't ( as defined in the past tense). And this is somewhat true, although ,in the past those two masters had similar goals and agendas.
3. The examiner (CNBC) ,then put Buffett on the spot , by asking a very leading and negative question,"but you don't think we need Fannie and Freddie to do it". At that point he was not sure what to say, or how it should be done and agreed with her that the GSE were not necessarily needed.
It did not sound as Buffett had any type of answer for a solution ,and he most definitely indicated the 30 year mortgage was and will be essential, especially for middle class homeowners. Also he is referencing past business models , both of gov't and Wall st in his comments.. The gov't now has changed . And has become a hybrid populist model ,with a third "master" arising....Main Street. Something that is quite new for the US. The GSE's are now also reformed and different from their Wall St. pro-activities in 2008. So really, the take from this ,The GSE's are a reformed structure in place that at best needs to be tweaked a bit, but definitely crazy to replace, when appropriate safeguards and regulations are in place ( read Rosner, Tim Howard, Mnuchins suggestions etc.) At this point the recap/release scenario, strongly favors a solution utilizing the GSE's . Which is a development that won't happen today or tomorrow but rather over the next weeks to months. The shareholders will be part of this.
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