Saving Fannie and Freddie

The battle over the future of Fannie Mae and Freddie Mac, the two mortgage giants that underpin our housing finance, has been one of the most bizarre ones I’ve covered. For decades, Republicans have tried to kill the entities, which grease the wheels of middle-class housing, in large part because they also have an affordable housing mandate. But why would the Obama administration join in that effort and end up trying to give away this business to the same banks it had to bail out during the financial crisis? And lie about it in court?

That’s exactly what happened, and if it had not been for the legal fight put up by hedge fund billionaires and thousands of small investors ( unlike any others in American capitalism, they are routinely called “speculators” in the media), the whole thing could have crumbled. The result likely would have been more expensive housing finance, and fewer homebuyers. But fight it they did, and now the Trump administration looks poised to finally end this mess.

Here’s my recent Institutional Investor story, which is a brief summary of the state of play.

img_2340-1-copyhttp://www.institutionalinvestor.com/article/3646151/asset-management-regulation/steven-mnuchin-meets-fannie-and-freddie.html#.WFbWWLYrK5w

An earlier New York Post story details the lies of the Obama administration, and the court documents that are sealed will see the light of day soon.

http://nypost.com/2015/09/10/obama-official-hid-fannie-and-freddies-profit-mojo-suit/

7 comments

  1. The Conservatorship of Fannie Mae and Freddie Mac have really been a Deceivership. The level of frustration and the fact that we have a de facto nationalization of the housing industry has been inadequately covered by the main stream media. The GSE are necessary for middle income Amercans to obtain home ownership. They are essential and necessary. Thankfully the Hedge Funds of Fairholme, Pershing and Perry Capital have made sure that this Deceivership facilitated by the illegal Net Worth Sweep will be coming to an end soon.

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  2. I purchased legally circulated stock in the GSE’s which, the gov itself affirmed, would be returned to the owners (shareholders) post rehab (Conservatorship). How does that make me a “greedy” speculator as opposed to an investor? I put my money on my faith the resurgence of the USA, expecting, hoping and praying the Nation’s economy would come back. And it has. How is that wrong or unethical???

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  3. I am in full agreement with pka3916 ! I am a retired Firefighter not a hedge fund (not to say anything wrong with the hedge fund people) and purchased FNMA common shares back in 2009 and felt being under conservatorship paying back 10% of the profit until our great nation got back on its feet was a fair deal. Never thought I would be sold a fraudulent bill of goods and demonized by my own government for doin so

    Liked by 1 person

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