What will Obama say and how will it be understood?
After reading 7 articles about Obama's sppech, it is clear that each one has been spun by the writer and editors. It is simply unclear from these articles what Obama will say in Arizona about GSE reform.
Will Obama end the Fannie and Freddie model or Fannie and Freddie as companies?
Can Obama end Fannie and Freddie?
Of course, not. He can do neither alone. He is only the President. He does not have dictatorial powers. The only thing the President can do is to tell the Congress (House and Sneate) what he will approve and what he will not approve. The Congress will then have to make the legislation along his lines of reasoning and suggestions or they may choose to battle and argue to reach a compromise. If a bill, is passed, the President, if it pleases him, will sign what is made. if it displeases him, he will veto it.
So all of this concern is nothing short of news hype from the anonymous leakers of this information to the press and the interpretation of reporters at a press conference.
None of what is found in the press reports and articles will be held for or against the President. He said nothing. Only his Press Secretary and other officials have spoken.
The President will be held accountable for what he says in Arizona and what will be found in the transcript of his speech. He will be held to what he says tomorrow and for the content of the speech transcript, not what has been written in these biased articles.
As far as GSE Reform goes he will say something like this.
* The government should have a role in housing finance
* The government role should be unambiguous with all of its responsibilities and duties made clear and specific.
* The government should collect publically given and fair guaranty fees for insurance in the case of catastrophic events.
* There should be an independent regulator with authorities and powers to conduct and enforce rules that support the government's role.
* Private sector capital must take the big hit and be completely devasted before the government makes payment on guarantees in case of a catastrophic financial event.
* No more taxpayer bailouts.
It is unclear where Fannie and Freddie are in this.
My guess and it is only a guess, is that a reduced Fannie and Freddie fit in with the government role and the FHFA will be the independent regulator. Why? Because the government does not regulate itself via an independent regulator. An independent regulator regulates entities, agencies and activities external to the three branches of government.
So the President wants to end the business model found in 2008 (it is already ended DeMarco and the FHFA). Obama wants private capital to take the major hit in the case of catastrophe (the banks will love this). He wants to maintain class wide access to the 30-year fixed rate mortgage at all times so affordable homeownership and rental housing are available for all qualified borrowers nationwide in all communities.
This does not match 1:1 with Hensarling's bill nor Corker-Warner's bill. So, there will be plenty of wrangling to get a bill that fits Obama's specification. The mortgage banks and lenders will not like it. This will drive the private sector away.
Below is an article that is close to facts and aligned with his previous speech at Knox College:
Obama to Target Housing Finance Reform in Arizona Speech
By Donna Borak
6 August 2013
American Banker
(c) 2013 American Banker and SourceMedia, Inc. All rights reserved.
WASHINGTON — President Obama will urge lawmakers on Tuesday to pursue a bipartisan housing finance reform plan that will protect American middle-class families and put an end to future taxpayer bailouts.
Obama, who will be speaking in Phoenix as part of a string of campaign-style speeches on the economy, is expected to lay out his must-haves in any future housing reform plan that he will require to ultimately sign off on any bill. Topping the list will be putting private capital at the center of any future housing finance system, clearly spelling out any government role, and ensuring access to credit for creditworthy borrowers.
The president vowed late last month to revamp the current system and take a new approach to help strengthen homeownership in the U.S.
"We'll work with both parties to turn the page on Fannie Mae and Freddie Mac and build a housing finance system that's rock solid for future generations," Obama said in a speech at Knox College in Illinois on July 24.
Since a 2011 white paper on housing finance reform, the White House has kept largely mum on the subject. But with momentum building on Capitol Hill, the Obama administration has been increasingly working behind the scenes to push reform of the government-sponsored enterprises.
"The president and his housing economic team have been working for a long time on the issue of GSE reform," said a senior administration official in a conference call with reporters ahead of the president's speech in Arizona.
Senior administration officials said the president's intention is to lay out his principles that he will use to judge the type of legislation that will be acceptable to him.
"We look forward to working with a bipartisan group to reach something that is fully consistent with the president's principles," said the official.
The administration has endorsed a bill by Sens. Bob Corker-R-Tenn. and Mark Warner, D-Va., but has also suggested there are areas "where that approach needs to go further or needs to be adjusted."
"We've seen good progress and good willingness to work together," said the senior administration official, naming a bipartisan effort by the Senate Banking Committee led by Chairman Tim Johnson, D-S.D. and Mike Crapo, R-Idaho.
The White House has not specifically weighed in on the Republican-led effort by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Rep. Scott Garrett, R-N.J. But officials did make clear that the president sees a need for a "limited and targeted role for a catastrophic guarantee," which would run counter to the GOP's housing reform bill.
Obama is also expected to outline intermediate steps the administration can take now as it awaits action by Congress.
"The president wants to make clear that while we believe we should pursue this type of legislation, there are intermediate steps to be taking to transition to a new housing finance system," the official said.
For example, Obama will continue to push for: aggressively winding down Fannie Mae and Freddie Mac's investment portfolio's by at least 15% each year; prioritizing the development of a securitization platform, an effort led by the Federal Housing Finance Administration; reducing loan limits; and gradually shrinking Fannie and Freddie's multifamily footprint.
Please note that all of what is in bold is already being done now via the PSPAs and the FHFA
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