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FHFA Voices In On Future Of GSEs: To Be Reconstituted Under Charters
More wishful thinking and generic talking points from the FHFA which will end up being the opposite of what will end up happening. In the meantime, still no update on proposed GSE regulation or why they are still not included in the Federal Budget. From Dow Jones:
WASHINGTON (Dow Jones)--The U.S. government "remains committed" to reducing the size of Fannie Mae (FNM) and Freddie Mac's (FRE) retained loan portfolios over time, the firms' regulator said Tuesday.
Edward DeMarco, acting director of the Federal Housing Finance Agency, said in a letter to House and Senate lawmakers that the two companies will be limited to holding no more than $810 billion in their retained portfolios by the end of 2010. Both firms are currently under that figure, which will be reduced by 10% annually.
"I am instructing each Enterprise to develop a detailed plan for how it will manage its portfolio to stay within those limitations," DeMarco wrote.
The letter outlines the steps the FHFA have taken with the firms since they were placed under government control, or conservatorship, in September 2008. While that process has worked thus far, DeMarco urged lawmakers to start discussing what role the companies should play in the mortgage finance market going forward.
"There are a variety of options available for post-conservatorship outcomes, but the only one that FHFA may implement today under existing law is to reconstitute the two companies under their current charters," he wrote.
The letter comes as the Obama administration is wrestling with what to do with the two firms while also trying to push financial regulatory legislation through Congress. Officials had said an update would be provided with the fiscal 2011 budget, which was released Monday, but no details or information were released.
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Midnight shredding party and immunity for all!
Paulson put F/F in a "time out". Seems instead they sent this pair straight to Bad Bank hell for good.
These government wizards now see no light at the end of tunnel. Only mitigation and obfuscation. This is an example of Extend and Pretend on Mach III-level steroids.....with that all-too-familiar "affordable housing" sack of bullshit chained around its neck.
No. Really. He's got this:
http://www.investorsinsight.com/cfs-filesystemfile.ashx/__key/CommunityS...
For a case study on regulatory effectiveness, lets look at the Freddie and Fannie example. These giant institutions were created by Congress, which retained control over them, dictating what they could and could not do. To aid its oversight, Congress created OFHEO in 1992, admonishing it to make sure the two behemoths were behaving themselves.
With that move, Fannie and Freddie became the most intensely-regulated companies of which I am aware, as measured by manpower assigned to the task.
Fannie Mae and Freddie Mac engaged in massive misstatements of earnings for years. So indecipherable were Freddie and Fannie that their federal regulator, OFHEO, whose more than 100 employees had no job except the oversight of these two institutions, totally missed their cooking of the books.
On June 15, 2003, OFHEO (whose annual reports are available on the Internet) sent its 2002 report to Congress specifically to its four bosses in the Senate and House, among them none other than Messrs. Sarbanes and Oxley. The reports 127 pages included a self-congratulatory cover-line: ”Celebrating 10 Years of Excellence.” The transmittal letter and report were delivered nine days after the CEO and CFO of Freddie had resigned in disgrace and the COO had been fired. No mention of their departures was made in the letter, even while the report concluded, as it always did, that: "Both Enterprises were financially sound and well managed.”
In truth, both enterprises had engaged in massive accounting shenanigans for some time. Finally, in 2006, OFHEO issued a 340-page scathing chronicle of the sins of Fannie that, more or less, blamed the fiasco on every party but, you guessed it … Congress and the OFHEO.
February 27, 2009
Warren E. Buffett
Yeah... it appears that Bernanke believes that Agency Debt has the explcit backing of the U.S. government, yet the agencies still operate well outside of Federal budgetland.
You can't have it both ways. You either bring the crap on budget... or you don't provide the guarantee.
What a bunch of thieving snakes.
Yeah, it really is disgusting how the Fed acts illegally and the Congress who created those laws looks the other way.
Interesting point in the note - they expect the delinquency buyouts to take up most of their portfolio space this year. Which begs the question - who will be buying agency MBS?
My guess remains, as always, the printing press.
what did duh-bye-bye do for their quasi-national notional junk ??
Did I work and save 40 years to get robbed by my own government?
Apparently, Yes!
Why didn't you guys tell me this when I was young enough to enjoy goofing off?