Director Watt Can Help Reform the System
- August 19, 2014
Guest Blog by Upendra Kulkarni
It has become clear that housing reform policy is not in the cards for Congressional approval this year, however, the Federal Housing Finance Agency (FHFA) has opportunities to help reform the system. FHFA Director, Mel Watt, visited Atlanta to discuss some of these options, and was met with a few Atlanta-based Investors Unite members to discuss broader efforts that FHFA can take to help restore the housing market and restore the rule of law.
Currently, the government still holds Fannie Mae and Freddie Mac in conservatorship – which means they are under complete government control and the government sweeps 100% of the profits out of the housing market and into general Treasury funds. When the government announced the Third Amendment Sweep, it unilaterally decided to send all Fannie and Freddie profits to Treasury coffers, leaving shareholders like me holding shares of a company of which the government decided to confiscate. Not only is this a violation of the rule of law and terrible precedent for market investment, it produces instability in the housing market and keeps taxpayers on the hook for a future government bailout.
When I visited Washington, D.C. in the Spring with Investors Unite, I was able to speak with my representatives about housing reform policy and the necessary inclusion of investor rights in any sort of reform. As the election draws nearer, any Congressional remedy does not seem likely. Director Watt, however, has the ability to end the conservatorship and return the two entities back to the public marketplace, restoring the rule of law and allowing private enterprise to set the companies’ worth. By returning the entities to public domain, the marketplace can stabilize and the companies can once again build capital to prevent a future housing crisis.
Updendra Kulkarni is an Investors Unite member from Alpharetta, Georgia. He owns his own IT consulting business. Mr. Kulkarni participated in Investors Unite meetings in Washington, D.C. in April and a press conference in Atlanta last week.