We have quite a bit to cover, but I want to begin by briefly addressing the recent paper offered by the NY Fed concerning Fannie and Freddie. I was thrilled to see their paper come out the day after our last post in which we pointed out the absurdity of the government’s increasingly contradictory defense of the lawless 3rd amendment. Their timing was impeccable as they immediately provided such a crystal clear example of the outrageous defense some have offered for our governments lawless actions.Their “research” paper was obviously written with one motive, to offer cover for the government in the shareholder lawsuits.With this motive, it is no surprise that their paper is riddled with multiple critical omissions and mistruths designed to present a clever rewrite of history.It surely is no easy task to attempt to write a paper such as this when you are forced to try and reconcile the government’s court defense with reality. I intend to write a more detailed post where we will dismantle their paper piece by piece but for now I want to address a few of the glaring defects.
They begin by stating:
“We describe the various resolution options available to policymakers at the time and evaluate the success of the choice of conservatorship, and other actions taken, in terms of five objectives that we argue an optimal intervention would have fulfilled.” Here the authors admit that they are not presenting what actually transpired or what was intended but what they themselves feel would have been optimal.This is important to point out because they cleverly intertwine a historical record of events with their own opinions.Essentially much of their paper is rendered worthless when viewed through this lens.
They also state that
“Third, both common and preferred equity holders were effectively wiped out, consistent with market discipline.” Consistent with market discipline? Market discipline has nothing to do with a majority stakeholder making a deal with a conservator to ensure that all future profits go their way.They make no attempt to explain that the 3rd amendment if allowed to stand was what would wipe out shareholder value. They also offer no explanation for why the 3rd amendment was put in place because they know it was illegal.This was just one more cunning attempt to provide cover for our governments lawless actions.
I look forward to addressing much more of their paper in greater detail, but I more look forward to the day when our government stops with the lies. It was never my dream as an American to have to spend so much time translating and unraveling my government’s lies. At this point I would highly suggest that our opponents in government, please stop, Obama should place a temporary moratorium that prevents anyone from publicly discussing the GSE issues. They should take some time and review as I have the multiple conflicting stories that they now have circulated.They should follow our lead and simply begin telling the truth, that would be the easiest way to end what is on the verge of becoming a major constitutional crisis. I am prepared to continue this battle as long as they choose though I must admit it would be more exciting if they presented more of a challenge.
The following email was sent out by one of our greatest allies Rep. Capuano seeking support for his bill (HR1036).The bill can be viewed here https://www.popvox.com/bills/us/114/hr1036 and we ask everyone to please support this bill.
From: The Honorable Michael E. Capuano
Sent By: firstname.lastname@example.org
Bill: H.R. 1036
DID YOU SEE THE ADMINISTRATION’S THANK YOU LETTER ON FANNIE AND FREDDIE?
Ok, there is no Thank You letter. But if there were one it might read like this …
Dear Member of Congress:
Thank you for allowing the Federal government to use Fannie Mae and Freddie Mac as piggybanks. Since President Bush took control of these agencies they have paid taxpayers about $40 BILLION more than they borrowed. That money has gone directly to fund general government and we are not even close to done yet – we estimate they will generate another $150 BILLION of profit over the next few years and we plan on spending that too.
I’m sure you recall that President Bush had to lend Fannie and Freddie $187.5 Billion a few years ago because they engaged in the same risky investment strategy that many on Wall Street did – and lost. Many of you were very upset at the loan from taxpayers and demanded it be paid back. Well, the full amount of the original loan has been paid PLUS another $40 billion on top of that – a 20% return on investment!
But here’s the best part – we have not allowed one penny of the $228 Billion paid to date to count toward principal reduction – so they still “owe” the original amount of $187.5 Billion. And the cherry on top – that money hasn’t even gone to build up their capital reserve or reduce fees on homeowners – every penny of this “sweep” has gone directly to fund general government!
Rest assured we plan on milking this cow as long as we can – we have no intention of letting them pay down a penny of the principal. There is no reason to stop – no one really thinks Congress will actually fix Fannie and Freddie, and the only complaints we’ve heard are from that pesky Mike Capuano. He filed HR 1036 to make us stop “sweeping” Fannie and Freddie profits to fund general government. Please, do NOT sign onto that bill, it would close down the piggybank and maybe even force serious consideration of fixing Fannie and Freddie.
Thanks again – let the good times keep rolling.
Sincerely, Your friend in conservatorship.
Now don’t forget – this letter is a fake. But I hope it made the point – you should co-sponsor HR 1036. This bill would stop the sweep of Fannie and Freddie profits, possibly force GSE reform onto our agenda, allow Fannie and Freddie to build up a capital reserve, fund the Housing Trust Fund, and reduce excessive fees paid by middle-class homeowners.
If you would like to sign onto HR 1036 or if you have any questions about the bill, please contact Gira Bose in my office at email@example.com or at 202-225-5111.
Michael E. Capuano
MEMBER OF CONGRESS
Staying true to her conservative beliefs Rep. Marsh Blackburn introduced HR 1673 confirming that many Republicans share grave concerns over the dangerously low capital levels at the GSEs.No one could possibly claim to be practicing fiscal conservatism and ignore the threat that leaving these two SIFIs grossly undercapitalized presents. It is only a matter of time before they need a draw and when that day comes it will be when the country can least afford to pay it.
This coupled with the daily caller piece calling attention to the Obama administration’s bizarre secrecy surrounding the “Fairholme lawsuit” discovery were big steps in bringing Republicans into our cause.
We ask all of our readers to go here: https://www.popvox.com/bills/us/114/hr1673 and support this bill.
Phil Angelides Pointed out that Peter Wallison’s false theories on the financial crisis are not “hidden in plain sight” but actually “missing in plain sight”. We continue to be surprised that so many prominent Republicans continue to stake their reputations on what now truly ranks up there with Loch Ness monster sightings.
“There is a reason that Peter Wallison’s “passion” to rewrite the history of the 2008 financial crisis is a “lonely quest” (“A Crusader Against the Common View of the Financial Crisis,” by William D. Cohan, Street Scene column, nytimes.com, March 12). The evidence presented by the Financial Crisis Inquiry Commission contradicts his revisionist view of the crisis. All nine of his fellow Commissioners — five Democrats, three Republicans and one independent — rejected his theory that government housing policies were the primary cause of the crisis.
The data shows that Fannie Mae and Freddie Mac followed, rather than led, Wall Street in expanding subprime lending. Delinquency rates for loans purchased or securitized by Fannie and Freddie were dramatically lower than for mortgages securitized by Wall Street. And Fannie and Freddie mortgage securities, with their implicit government backing, undisputedly did not cause the losses that cascaded through the big Wall Street financial firms.”
Financial Crisis Inquiry Commission
In the “Fairholme Lawsuit”, there will be a status conference tomorrow morning at 11 am concerning depositions.If Judge Sweeney allows depositions to proceed at this stage, it will change the dynamics of this battle greatly in our favor.It will be fascinating to see how the co-conspirators navigate the multiple conflicting reasons that have been given for the 3rd amendment sweep.We caution those who will give depositions not to make the same mistake Mario Ugoletti did and give sworn testimony concerning the false reasons for the 3rd amendment. Please take note of our last post and remember that no one besides Attorney Schwind is defending the now obvious false reasons for the sweep. Should you risk your career defending under oath what no top level officials will even defend in public? Before you give your testimony, take a good look in the mirror and ask yourself if you ever imagined you would be forced to consider lying under oath as part of your service to our country? Also do not forget that the cover up is so often far worse than the crime in situations like this, Mario Ugoletti and others may soon have to learn this the hard way, you don’t have to. You do not want to join the list of those likely to soon be facing perjury charges.
Keep the Faith!