We literally had a flood of very big news in the last 24 hours. We will briefly comment and will likely add more commentary tomorrow.
Widely respected Michael H. Krimminger former general counsel to the FDIC had an excellent article on American Banker entitled: “FHFA’s Permanent Conservatorship Ignores the Law.”
“The perpetual conservatorships and Treasury sweeps are a violation of every principle of insolvency law. I do not make this statement lightly. After more than twenty years at the Federal Deposit Insurance Corp., and frequent participation in domestic and international efforts to improve insolvency laws, I provided technical advice to Congress on HERA.”
“The continuation of the sweeps through the conservatorships is a violation of every principle established in bankruptcy and in the more than 80 years of FDIC bank resolutions. And it has no support in HERA.”
Please read the entire article it makes several key points. Also let’s try and get this circulated as much as possible, it carries a lot of weight.
In a press release on Senator Schumer’s web page he we find this gem. “The requirement that Fannie Mae and Freddie Mac contribute to the two funds was suspended when the companies were taken into conservatorship in September 2008 during the financial crisis. Fannie Mae and Freddie Mac have since fully repaid the taxpayers.”
So now we have Senator Schumer, Senator Warren, and Senator Johnson all declaring that the tax payers have been repaid.Three of the biggest financial heavy weights in the Democratic party.I think you can all see where this is headed.
Bill Ackman was on Bloomberg TV today and had this to say-
“Ackman was asked whether there was money to be made in Fannie & Freddie after the most recent court decision and he responded yes, and that they have added meaningfully in the last week or two to their positions.”
“Ackman reiterated that he does not think the court decision addressed the substance of the most important argument that the government took private property and that the government stepped in and took 100% of the profits of Fannie & Freddie unilaterally. He compared it to the government walking into Apple and taking 100% of the profits. The host quickly stopped him mentioning that the GSEs are in a conservatorship and Ackman responded that it does not mean they can steal.”
WE are providing the link to the Iowa Hearing once again.It really provides some key insights. I will say that it truly is sad watching the our government try to defend the indefensible. I felt like I was watching the Bernie Madoff trial starring the U.S. government as Bernie. The farther they push this the more they are setting several very dangerous precedents.I hope to share some of our key take aways soon.
(Scroll down to Continental Western)
One of our readers sent over this draft of a letter template. Great job!
Here is a ROUGH draft letter to senator/representatives. Please do not attach my name to this directly.
City, State Zip Code
The Honorable [Insert Senator/Representative’s Name]
City, State Zip Code
Dear [Senator/Representative (Insert Last Name)]:
I am writing you in regards to the Federal Housing Finance Agency (the “FHFA”) and the present status of their conservatorship (the “conservatorship”) of Fannie Mae and Freddie Mac (the “enterprises”).
I have spent time educating myself on the basis for conservatorship and studying the facts surrounding the conservatorship of the enterprises. It is clear that the housing and economic atmosphere have changed substantially since the conservatorship was initiated in 2008 and the issues that surround the conservatorship and the enterprises are ripe for discussion.
As I am sure you are aware that there are multiple cases challenging and questioning the actions of the government under the conservatorship. The courts cannot be relied upon alone to resolve the issues that surround the FHFA, the enterprises and the conservatorship. The future of our country depends too greatly on resolution of the issues to continue to push them off and simply leave them for the courts to decide on.
The benefits of establishing a path ending the conservatorship and returning the enterprises to private ownership are clear. The enterprises are absolutely necessary to continued growth and prosperity of both our citizenry and our country as a whole. A clearly defined path to release will help to maintain confidence in the housing industry and guarantee affordable access to the 30 year fixed rate mortgage to all Americans who meet reasonable underwriting standards for generations to come.
Again, the issues are important and the time to act is now. Will you please engage the FHFA in order to establish a path to end conservatorship and return the enterprises to private ownership.
I greatly appreciate your time and look forward to your response.
[Insert Your Name]
Finally, I just want to thank everyone again for reaching out to Rep. Ed Royce the last few days. The response was fantastic. http://royce.house.gov/news/documentsingle.aspx?DocumentID=397595#Comments Keep up the good work, our message of truth is having an incredible impact. Keep the faith!