First I would like to commend this insightful followers who added some intriguing comments after my last post “connecting the dots”. I encourage anyone who has not read them to do so. It’s great to see that people are indeed connecting the dots and beginning to formulate the big picture. Bravo!
We now see the next phase of the coup develop. This will be the gradual changing of the narrative from Fannie and Freddie must go to reform and release. I call attention to an article that was on The Huff Post first.”Housing Finance Reform Should Now Focus on Fixing and Preserving Fannie Mae and Freddie Mac” by John Taylor.
We then saw Warren Buffet a staunch Obama ally give his nod to reforming and releasing Fannie and Freddie during the Q and A segment at his annual conference.I am going to post the exchange below I think it was clear that Warren gave an implicit nod to Berkshire investors to possibly get in Fannie and Freddie here.
I was glad to see Todays following article in Politico by Jon Prior confirming the coup. “Democratic senators who recently opposed a bipartisan housing finance bill have begun mulling how to devise a plan that would let Fannie Mae and Freddie Mac stick around. Such an approach, while so far only under preliminary discussions, would vary significantly from a plan authored by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) that would abolish Fannie and Freddie and create a new mortgage finance system. The panel approved the bill by a 13-9 vote on May 15 but it is unlikely to receive a floor vote this year.”
I know some of you felt like we were starting to become an Oliver Stone conspiracy flick, but the coup is not only real but moving quickly to solidify their gains. In the coming weeks we will see the narrative continue to shift, and a chorus begin that calls for our release.
I hope that once republicans begin to realize that their dreams of eliminating Fannie and Freddie have been dashed more of them begin to speak out against the illegal sweeping of all of our profits. They are the supposed champions of the free market and protectors of shareholder rights yet on this issue they have been notably mum save for Senator Toomey, who did a great job Feigning concern, but then threw us under the bus in the Johnson/Crapo vote.
On this eve of Memorial day I am here to say that although they have tried we will not be silenced. This is OUR UNITED STATES OF AMERICA; we will utilize our right to free speech. We know you have made repeated and possible successful attempts to hack our computers.You will not be successful in silencing us or our sources, and you will be held accountable for all you are doing to try and forever change our great nation. I call on all of our followers to honor those who have sacrificed their lives to protect this nation and preserve our way of life.It is our duty to continue to hold Washington accountable and prevent them from turning America into Hugo Chavez’s Venezuela. God bless us all and always Keep the Faith!
Buffet endorsing reform and release.
Do you think we need housing reform? How do you think we should do it, and should Berkshire be involved?
Warren: I think the 30-year fixed rate mortgage is a terrific boon for homeowners, but it’s not a great instrument to own as an investor. It’s done a lot for home ownership in the country. Let people get into homes earlier, kept costs down — the government guarantee keeps the cost down.
Home mortgages are an $11 trillion market, and there is no capacity for private industry to do the job. The question is how to keep the government in the picture without keeping politics in the picture. You’ve found Fannie Mae and Freddie Mac doing dumb thing with politicians prodding them into it.
I think there could be a way. I wrote an article 30 years ago when S&Ls were falling apart, suggesting how to get the private sector into pricing and evaluating risk. But essentially the government being the main insurer. There could be a way that model works in terms of home mortgage insurance.
I don’t think we’d likely be a player, because others would be more optimistic in setting rates. In the end the government would need to be the main insurer. Perhaps private industry could set the price and take 5%, and the government would take 95%.
I do think it’s important, mortgages for homes, to get a correct national policy. I know it’s being worked on, and I think very unlikely that Berkshire will play any part in it… Charlie?
Charlie: When private industry was running it, they owned the whole field and you had the biggest bunch of thieves and idiots running things, so I’m not all that trusting of private industry in this field. At the moment, Fannie and Freddie are being pretty conservative, and they’re making pretty much all the home loans. I think that’s OK. I’m not looking forward to when the investment banks get back to a race to the bottom.
Warren: One question is whether you let Fannie and Freddie run off as is… I think certainly one of the things that led Fannie and Freddie astray was their desire to serve their masters and deliver double-digit earnings gains. If they had stuck to insuring mortgages instead of becoming the biggest hedge funds in the country. Would you let them have portfolio activity at all?
Charlie: Let them just keep doing what they’re doing. They are on the whole being very conservative. When they really got lousy, when everyone was rushing into the market, Fannie and Freddie jumped in as well. I think that particular experiment in privatization was a total failure.