Monday, January 20, 2014

Sooner or Later, Congress Will Face the Music on GSE Shareholder Claims

lcald67  Jan 13, 2014 6:01 PM Flag

Sooner or Later, Congress Will Face the Music on GSE Shareholder Claims

In 2014, lawmakers and the Obama administration will no longer be able to avoid confronting claims by GSE shareholders seeking recovery, according to one industry expert.

At the recent Financial Services Roundtable Housing Policy Council forum on GSE reform, financial industry consultant Bert Ely quizzed Sens. Bob Corker, R-TN, and Mark Warner, D-VA, about GSE securities. Specifically, Ely sought their positions on the merits of Fannie Mae and Freddie Mac preferred and common shareholders’ claims that there should be a mechanism for recoveries on those securities.

Corker replied that he and other lawmakers are drafting an enhanced version of the GSE reform bill he and Warner filed last year and recognize that “somehow or another, that has to be dealt with.”

“What I think their answer did was bring home to folks the extent to which there is a linkage between these residual stock interests and some kind of eventual restructuring of government guaranties in housing finance,” Ely told Inside The GSEs after the event.

GSE common shareholders became entangled in a financial limbo of sorts when Fannie and Freddie were placed into government conservatorship in September 2008

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