Replies to post #813855 on Fannie Mae-No Politics (FNMA)

[TightCoil]

I nominate Nagra for Board Captain

[jwood9207]

Crap. Bessent's answers were a complete nothing burger. You can read into it anything you want.

[EternalPatience]

I read the responses and its text book answer of beating around the bush and not committing to anything...

[Ace Trader]

SCOTT Bessents response to Question 68 to 84 is all I can find.
https://www.finance.senate.gov/imo/media/doc/responses_to_questions_for_the_record_to_scott_bessent.pdf

Question 68: Do you support ending the conservatorships of Fannie Mae and Freddie Mac? If so,
why?
Answer: I look forward to working on the current status of the conservatorship of Fannie Mae
and Freddie Mac. The conservatorships have persisted for more than 15 years, and no
conservatorship should be indefinite. However, any actions pursued should be carefully
designed and executed.

Question 69: If you decide to end the conservatorships of Fannie and Freddie, will you seek to do
so through administrative action or through legislation by Congress? In your view, what
conditions must be met before ending the conservatorships? Are there any congressional actions
that must take place to end the conservatorships?
Answer: If confirmed, I look forward to exploring all options available and being briefed by
Treasury staff and all interested parties on the status of Fannie Mae and Freddie Mac, and if
confirmed I will commit to acting in a manner that is thorough and thoughtful, and consistent
with the law. If any legislative changes are warranted, I commit to working collaboratively with
Congress in this process.

Question 70: In your estimation, how long would it take to meet any required preconditions and
complete the process of releasing Fannie and Freddie from conservatorship?
Answer: I look forward to being briefed by Treasury staff and all interested parties on the
current status of Fannie Mae and Freddie Mac, and if confirmed, I will commit to carefully
assessing and instituting a process if it is deemed appropriate.

Question 71: Should the Trump Administration bar any individuals or entities who would
financially profit from the end of Fannie and Freddie’s conservatorships from discussions and
decision-making about potential release?
96 Urban Institute, “Reducing the Racial Homeownership Gap,” https://www.urban.org/policy-centers/housing-
finance-policy-center/projects/reducing-racial-homeownership-gap.
Answer: If confirmed, I look forward to hearing from a wide and diverse range of interested
parties in seeking the best path for Fannie Mae and Freddie Mac in compliance with applicable
law as set by Congress.

Question 72: What conditions would you seek in an agreement to end Fannie and Freddie’s
conservatorships to ensure that American families, especially low-income families, are not
harmed by these efforts? How would such conditions be enforced?
Answer: I look forward to being briefed by Treasury staff on the status of Fannie Mae and
Freddie Mac, and if confirmed I will commit to acting in a thorough manner that improves home
affordability in the United States.

Question 73: If they are released from conservatorship, do you support requirements for Fannie
and Freddie to continue to support access to affordable mortgage credit in all markets and for
qualifying low- and moderate-income families? If so, how would you impose those requirements
and would congressional action be necessary?
Answer: If confirmed, I look forward to working with the entire housing finance system--
including that which is supported by the federal government--to ensure that mortgage credit is
made available to all markets at all times in the US.

Question 74: If they are released from conservatorship, do you support requirements for Fannie
and Freddie to continue to support access to affordable multifamily mortgage credit for housing
in all markets and for qualifying properties, including those affordable to low-income renters? If
so, how would you impose those requirements and would congressional action be necessary?
Answer: Congress has tasked Fannie Mae and Freddie Mac with supporting access to mortgage
credit across the nation, including for low- and moderate-income borrowers. It is important that
Fannie Mae and Freddie Mac fulfill their statutory mandates. If confirmed, I look forward to
working with the entire housing finance system--including that which is supported by the federal
government--to ensure that mortgage credit is made available to all markets at all times in the
United States.

Question 75: Do you support requirements for Fannie and Freddie to continue to cross-subsidize
the mortgages they insure when released from conservatorship so that mortgage rates do not
increase for American families? If so, how would you impose those requirements and would
congressional action be necessary?
Answer: If confirmed I look forward to being briefed by Treasury staff on the matter, and to
engaging with you and your staff on this matter to better understand what actions may be
necessary.

Question 76: Do you support requirements for Fannie and Freddie to be subject to regulated rates
of return for shareholders when released from conservatorship to encourage responsible
management of their businesses and to ensure that mortgage costs do not increase for American
families? If so, how would you impose those requirements and would congressional action be
necessary?
Answer: If confirmed I look forward to being briefed by Treasury staff on the matter, and to
engaging with you and your staff on this matter to better understand what actions may be
necessary.

Question 77: Under conservatorship, FHFA has required Fannie and Freddie to treat all
originators equally without regard to size or business volume.97 Do you pledge to maintain that
requirement in any agreement to release Fannie and Freddie from conservatorship? If so, how
would you implement and enforce such a requirement?
Answer: Broad access to the market is important, which includes ensuring that competition
exists across originator business models and sizes. If I am confirmed and such a decision is
made, I look forward to engaging with you and your staff on this matter.

Question 78: Before their conservatorships, Fannie and Freddie were prolific lobbyists of the
federal government.
98 Does FHFA have the authority to restrict their lobbying activity outside of
the conservatorships? If so, what tools would FHFA use to impose such a restriction? If not, are
you concerned about the GSEs’ lobbying activity if the conservatorships were terminated?
Answer: If confirmed, I look forward to working with the Director of FHFA to understand the
full extent of the tools and authorities at FHFA.

Question 79: During the 2008 crisis, the federal government bailed out Fannie and Freddie,
vindicating widespread investor views that the GSEs were backed by an implied government
guarantee despite their lack of an explicit government guarantee.99
A. If the conservatorships are ended, would you support extending a full faith and credit
guarantee to Fannie and Freddie, their securities, or their debt? In your view, would doing
so require congressional action or could FHFA or the Treasury extend such a guarantee
through administrative action?

97 HousingWire, “FHFA formally ends mortgage volume discounts from Fannie Mae, Freddie Mac,” Kelsey
Ramírez, September 23, 2019, https://www.housingwire.com/articles/50212-fhfa-formally-ends-mortgage-volume-
discounts-from-fannie-mae-freddie-mac/.
98 CNBC, “Fannie, Freddie Spent Millions on Lobbying,” Associated Press, July 17, 2008,
https://www.cnbc.com/2008/07/17/fannie-freddie-spent-millions-on-lobbying.html.
99 NPR, “‘Kill Them, Bury Them’: The Rise Of Fannie And Freddie,” Alex Blumberg, March 28, 2011,
https://www.npr.org/sections/money/2011/04/22/134863603/kill-them-bury-them-the-rise-of-fannie-and-freddie.

B. Should Fannie and Freddie be charged a fee for any government guarantee, whether
explicit or implied? If so, how much should that fee be and how would such a fee affect
mortgage costs?
Answer: It is my understanding that legislation from Congress would be required for an explicit,
paid-for guarantee backed by the full faith and credit of the government. If confirmed, I look
forward to being briefed on options regarding a government guarantee.

Question 80: Because of the federal government’s bailout of Fannie and Freddie, the federal
government owns senior preferred shares in the GSEs.100 Should American taxpayers be
compensated for any reduction in their senior preferred shares?
Answer: Treasury should be compensated for its past support of the GSEs, and if confirmed I
look forward to exploring options for potentially dealing with this matter.

Question 81: In the midst of this housing supply crisis, do you agree that any funds returned to
the Treasury from the redemption of Treasury’s senior preferred or common shares of Fannie
and Freddie should be earmarked to fund investments in affordable housing supply?
Answer: If confirmed, and if a decision is rendered to end the conservatorship of GSEs, I look
forward to working with legal counsel and all interested parties to appropriately determine how
the proceeds from the dissolution of the Government’s interest in the GSEs is determined.

Question 82: If Fannie and Freddie were released from conservatorship, do you anticipate that
credit ratings for their products would be downgraded? If so, how much do you estimate that
their ratings would be downgraded by and how would that rating downgrade affect investors’
willingness to purchase their securities? How would these changes affect mortgage rates for
homebuyers?
Answer: If confirmed, I look forward to working with all interested parties, including the
Director of the FHFA to understand the potential implications of a release from conservatorship
of the GSEs, including potential impacts on their credit ratings and the downstream effects.
Question 83: In your estimation, how much would private investors in Fannie and Freddie
immediately gain from the release of the GSEs from conservatorship?
Answer: If confirmed, I look forward to exploring options related to restructuring the GSE’s
capital structure. The implications for private investors are contingent on these decisions and as
such there is a wide range of potential outcomes.

100 Federal Housing Finance Agency, “Senior Preferred Stock Purchase Agreements,”
https://www.fhfa.gov/conservatorship/senior-preferred-stock-purchase-agreements.

Question 84: Can you commit to the American people that any efforts to release Fannie and
Freddie from conservatorship will not raise housing costs?
Answer: President Trump is committed to lowering housing costs, and if confirmed I will work
to advance this goal.