U.S. Treasury Spokesman Says Only Way To End Conservatorship Is Legislation
Nov. 23, 2014 1:24 PM ET | Includes: FMCC, FNMA
Disclosure: The author is long FNMA, FMCC. (More…)
Summary
A Treasury Department spokesman on Friday said the Obama administration wouldn’t consider ending government control of mortgage-finance companies Fannie Mae and Freddie Mac without legislation.
Treasury spokesman wrote in an email, “Comprehensive housing finance reform legislation is the only way to end the conservatorship.”.
THE COURT: “The Government is saying Plaintiffs lack standing, this Court lacks jurisdiction because the conservatorship is not part of the Government, it’s not a Government entity.”.
Treasury Calls Shots for Frannie
Joe Light at the WSJ recently wrote up the summary of an e-mail exchange with a Treasury Department spokesman.
“The administration’s position has not changed,” the spokesman wrote in an email. “Comprehensive housing finance reform legislation is the only way to end the conservatorship responsibly and transition to a new system that brings stability back to the housing market while protecting taxpayers.”
Treasury sweeps entire net worth of each Enterprise
This is consistent with what the Treasury has been doing all along, aka calling the shots as they relate to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC). Look and see what happens when they call the shots. Judge Royce Lamberth’s Memorandum Opinion summarizes this beautifully.
In simpler terms, the amendment “requires Fannie Mae and Freddie Mac to pay a quarterly dividend to Treasury equal to the entire net worth of each Enterprise, minus a small reserve that shrinks to zero over time.”
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These dividend payments do not reduce Treasury’s outstanding liquidation preferences.
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Third, according to the press release, the net worth sweep would “make sure that every dollar of earnings that Fannie Mae and Freddie Mac generate will be used to benefit taxpayers for their investment in those firms.”
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http://seekingalpha.com/article/2704865-u-s-treasury-spokesman-says-only-way-to-end-conservatorship-is-legislation