Conservative analysts are just now catching on to the news I broke in a blog post on May 13,2014 entitled “the coup has begun.” I actually was asked to refrain from speaking about this out of fear that it could derail the entire effort. As our readers have seen I recently broke my silence on this critical issue recently. The reason I did so was because we received multiple indications that a wider audience was finally waking up to this reality. Our indicators were publicly confirmed in an article published by the Washington Examiner written by Joseph Lawler titled “Conservative analysts warn of growing Fannie and Freddie” released Wed. 9/3/14.In the Article Joseph reports “Fannie Mae and Freddie Mac are set to grow, and that has conservative economists worried.The Federal Housing Finance Agency is proposing to increase the number of home loans for people in low-income areas and for people in multifamily housing such as condos and townhouses. The goals, which the agency is required by law to set, are for the years 2015-2017.Coupled with a decision by new FHFA Director Mel Watt earlier in the year to cancel an increase in the fee it charges for government insurance on mortgages — a move that will ease credit terms — Friday’s announcement concerns Winkler. “The overall tone shift from shrinking the government-sponsored enterprises to maintaining broad access has conservatives worried,”
Worried? I was wondering how long it would take for conservatives to realize that Fannie and Freddie were not going anywhere? This realization has lead to a growing chorus from conservative voices to condemn the illegal third amendment sweep. In an op-ed written by James K. Glassman a former George W Bush Administration official he not only declares the sweep illegal but actually call for the release of Fannie and Freddie. It appears that he read Bill Ackman’s slide show as he draws a very similar argument. Glassman states “The Third Amendment may well be an illegal taking by the feds. It’s being challenged now in the courts. However, the irony is that this perpetual conservatorship may be costing the Treasury money at the precise time that the federal deficit has been running at near-record levels. Here’s why: Right now, Fannie Mae and Freddie Mac are highly profitable and, in the open market, would be worth hundreds of billions of dollars. Although many in Treasury considered the common stock of the mortgage funders worthless in the depths of the crisis, the government’s stake now represents the largest commitment fee in financial history.What can the government do with this ownership stake? Convert it to cash. Private investors want to restructure Fannie and Freddie, and have already plowed huge sums into the firms. If restructured, Fannie and Freddie could be relisted on the New York Stock Exchange, and Treasury’s shares sold over time to public investors. The government would get out of a business it shouldn’t be in. The current ward-of-the-state condition is unsustainable.”
Finally I want to call attention to Barry Ziegler’s Op-ed published on Housing Wire.Barry has an extensive background in housing including serving as Senior Vice President for Community Lending at Fannie Mae.He lays out very well all the steps that Watt has already undertaken which will ensure Fannie and Freddies survival. One issue where I think he could use a little correction was on the Common Securitization Platform (CSP) He mistakenly shared former chief Demarco’s plans for the CSP, Demarco envisioned the CSP as an avenue to replace Fannie and Freddie. Watt had this to say in his Brookings Institute speech. “First, after extensive discussion within FHFA and with the Enterprises, we have clarified that the agency’s top objective for the Common Securitization Platform is to make sure that it works for the benefit of Fannie Mae and Freddie Mac.” I have posted links to all three articles below.
Remember President Obama had Senator Harry Reid exercise the “nuclear option” to get Watt confirmed in the senate. Watt almost immediately smashed Prior FHFA chief Demarco’s plans to shrink and eliminate Fannie and Freddie.Watt has rapidly taken steps to restore Fannie and Freddies footprint as well as put many critical reforms in place in preparation for release. I must say that I have found it amusing watching the likes of Senator Corker and his Cronies shrill with excitement at the prospect of ending Fannie and Freddie, knowing all along that their hopes will be dashed. Keep the Faith!