Replies to post #73001 on Fannie Mae-No Politics (FNMA)

[bmp152]

Just because Watt has a confirmation hearing in the coming week, does not in any way guarantee that he will be voted in by the Senate (he needs 60 votes I believe). The GOP largely doesn't want him to hold the FHFA director position.

In fact, Watt is strongly in favor of providing current loan holders with more relaxed refinancing options, as well as forgive some outstanding housing debts. By doing so, in my opinion, he is partly undoing some of the hard work FnF have done to decrease the government's bond buying risk.

As far as shareholder interests are concerned, it seems like DeMarco at least has a plan for exiting the conservatorship, while Watt's mission is unclear at this point.

Of course, all IMO...

[Mr Pennypacker]

http://www.bizjournals.com/bizjournals/washingtonbureau/2013/05/01/obamas-housing-finance-pick-to-face.html?page=all

Oldie but goodie.

[obiterdictum]

I've seen articles saying Watt would likely keep FnF in c-ship for a long time.

Perhaps. How can we know what is the case?

Demarco is more in favor of allowing FnF to eventually be let out of c-ship, correct?

Yes. That is what is CSP plan says. However, he does say the GSEs are going to be wound down. The uncertainty with DeMarco is that we do not know how far a wind down it will be, partial or completely with liquidation. He is mum on the subject and leaves it without giving the GSEs a clear future status.

If Watt is installed, is there any reason to think that would be good for FnF?

The only reason I can imagine is that the Democrats, in general, do not want to liquidate the GSEs and so they may be a stronger probability that Watts being a loyal Democrat and friend of the President, he will not attempt to liquidate. At the same time, we do not know how he will hand the conservatorship, restructuring or privatization of the GSEs since the White House has not given a clear view except the three options in a white paper none of which are supported to the exclusion of the others.

See: http://www.treasury.gov/initiatives/documents/reforming%20america's%20housing%20finance%20market.pdf

Corker's bill was a PR stunt that seeks to dissolve FnF. Given that legally that would be difficult to get away with, without compensating shareholders, maybe the GOP's true aim is to release FnF from c-ship and diminish gvt involvement without actually dissolving the companies.

That bill has no chance of doing anything as long as the GSEs are in the FHFA conservatorship. As mentioned before it is a gadfly bill to stimulate discussion in the Senate and House. It is legally without substance since the Congress cannot directly dictate to or interfere with the actions of an independent federal agency.

The constitutionality of the purchase agreement has not been tested in court and that may be tested soon by the lawsuit filed against the FHFA and US Treasury and their agents. If that is indeed the aim, and it occurs, only then can the Congress have a go at them with legislation to diminish or liquidate them. While in the conservatorship the Congress is sidelined. The GOP without doubt, in the main, want to liquidate them.

Who's really better for FnF pps, Watt or Demarco?

Good question, hard to answer given what limited info we have about their views and positions on the GSEs going forward. I would need much more information about the Democrats and President's positions. I have too few to make an informed opinion. I do not have anything but that white paper above, some comments by Maxine Waters, a handful of articles by Democrat supporters, and an attempt to have DeMarco fired for not supporitng principal forgiveness. Do you have more than this?

Perhaps in the coming weeks, more info will emerge. For the Senate confirmation hearings, it is certain that Watts will prepare for it by knowing such positions and how to handled pointed GOP inquiries. To be nominated in a Democrat Senate split 52-2-46 (http://www.govtrack.us/congress/members), he will have to demonstrate he is not a political envoy of the President and to do that he has to demonstrate the breadth and depth of knowledge about all GOP issues with the GSEs and where he finds himself situated in that regard. Then there will be a news frenzy that will occur afterwards filled with both inaccurate and accurate information that will need to be separated out. It may then become more clear where the Democrats, the President and Watts stand in relation to the GSEs present and future.

[Cash47873]

From a political perspective that is very interesting. On one hand you have the Democrats that created F and F for the purposes of creating home ownership for more Americans. On the other hand you have the Republicans that historically would fight for the rights of the private corporations like F and F are.

Both seem to have a dog in the fight as F and F are both private and yet GSEs.

But then there are those pesky laws that were created that despite the crooked and self serving interests of both parties can not be over looked.

I'm not the biggest fan of attorneys and their typical self serving interests but in this case the attorneys representing the shareholders of F and F in federal court against the government are like the Cavalry coming over the hill to save the settlers from the Indians. These laws are very clear and the rules of the c-ship are very clear. Case precedent is also very clear which the FHFA itself has had a hand seeking while filing suit against the banks for selling bogus paper to the Gov backed GSEs, ruh roh!

Right now, all longs in F and F are golden! The current period is like when your best friend as a kid invites you to come to Disney World with his family. You know you're going to have a great trip......after your friend and his brother are done fighting in the car for 4 hours!

$FNMA!