Tuesday, January 21, 2014

The Just And Legal Way Forward For Fannie Mae

aroadrock  4 hours ago Flag

The Just And Legal Way Forward For Fannie Mae And Freddie Mac by Bryndon Fisher - Excerpts

Out of the ashes, a phoenix shall rise. But, unlike that creature from Greek mythology, the resurrection of Fannie Mae ("Fannie" (OTCQB:FNMA)) and Freddie Mac ("Freddie" (OTCQB:FMCC)) was not due to a miracle. No, these two companies recovered through a combination of 1) an improving economy, 2) effective management decisions, and 3) prudential stewardship by their conservator, the Federal Housing Finance Agency (the "FHFA"). And now these firms are experiencing robust earnings, with Fannie and Freddie reporting pre-tax income of $8.1 billion and $4.5 billion, respectively, for the first quarter of 2013; and they are expected to remain profitable for the foreseeable future.
HERA makes clear the conservator's purpose of ". . . rehabilitating the affairs of [Fannie and Freddie]" 12 U.S.C. § 4617(2). Furthermore, the purpose of the conservatorships, according to the FHFA, is "to preserve and conserve each [company's] assets and property and restore the [companies] to a sound financial condition." The shareholders in these two companies relied on the promises made by the FHFA and, thus, willingly bore the risk that the economy would either not recover quickly enough or substantially enough to allow Fannie and Freddie to survive. Now that they have come back, the FHFA has lost its way and decided that those promises are inconsequential in principal, on moral grounds, or as a matter of law.
John Adams once wrote that we are "a government of laws, and not of men," meaning that no one person (or agency) makes the laws or decides the laws, and no person (or agency) is above the law. The shareholders (both common and preferred) in these companies have legal rights that cannot be ignored or circumvented for political conveniences or objectives. And although the FHFA is owed a debt of gratitude for their sterling leadership during the dark days of the Great Recession, they need to return these entities to their rightful owners -- US. 

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See full article on restorefanniemae.us

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