Replies to post #1719 on Fannie Mae Preferred S (FNMAS)

[44centsAKAchoccake]

Statement of FHFA Acting Director Edward J. DeMarco On Changes to Fannie Mae and Freddie Mac Preferred Stock Purchase Agreements

August 17, 2012

http://www.fhfa.gov/webfiles/24203/FINAL_FHFA_PSPA_8172012.pdf

“The steps taken today between the Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, and the U.S. Department of the Treasury to amend the Preferred Stock Purchase Agreements (PSPAs) are important for ensuring stability in the housing finance market. These steps reaffirm our commitment to move forward with the components of the Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac, which includes building for the future, gradually contracting their operations, and maintaining foreclosure prevention activities and credit availability. Replacing the current fixed dividend in the PSPAs with a variable dividend based on net worth will help to ensure stability, fully capture financial benefits for taxpayers, and eliminate the need for Fannie Mae and Freddie Mac to continue to borrow from the Treasury Department to pay dividends. As Fannie Mae and Freddie Mac shrink, the continued payment of a fixed dividend could have called into question the adequacy of the financial commitment contained in the PSPAs. In addition, the faster reduction in the retained mortgage portfolio will further reduce risk exposure and simplify the operations of Fannie Mae and Freddie Mac.

“These changes provide certainty to Fannie Mae, Freddie Mac and market participants as they continue to perform their critical mission of providing liquidity and stability to the country’s housing market. The steps today are also important as Congress and policymakers contemplate
the future of Fannie Mae and Freddie Mac.”

[taintedfud]

"Let's not forget, pundit Nr.1: Edward DeMarco.

His words on February 28, 2012:

"In particular, FHFA must consider what it means to “take such action as may be necessary to put [Fannie Mae and Freddie Mac] in a sound and solvent condition” when it is clear that the draws the companies have taken from the Treasury are so large they cannot be repaid under any foreseeable scenarios.""

i think this is a CYA statement avoiding the bush drum beaters (aaaannd Barney frank)of 2008. he is doing an excellent job of keeping the stock price down and stable while somebuddy is accumulating at a rate of 500-1000K shares of pfd a week, and not moving the pile much.