What Do You Get When You Claim Conservatorship But Act Like A Receivership?
- March 23, 2015
A “conceivership,” as apparently coined by TimHoward717 on his always interesting and informative blog, raises provocative notions about the unending saga and Fannie Mae and Freddie Mac.
He takes a giant whack at U.S. Treasury Secretary Jack Lew’s recent stint in the hot-seat in front of the House Financial Services Committee, noting that Lew’s justification of the Third Amendment Sweep to Congress and the government’s lawyers’ defense in court are very different. Here’s a taste of what he writes:
“The exchange between Treasury Secretary Lew and Rep. Capuano made clear the administration’s reasons for the 3rd amendment sweep. Lew made clear that the sweep was enacted for three reasons: to buy more time for major housing finance reform, lower the debt and the fact that taxpayers are still on the hook for possible losses. You will note that none of these reasons have been used in the government’s defense of the sweep in court. They know that legally these reasons would never stand up to legal scrutiny.
“… Now wouldn’t it have been amusing if instead of the reasons he gave for the sweep and hijacking, Lew had said, ‘The imminent massive profits were not a factor it was our concerns that the circular draws would breach the GSES credit line. Also HERA authorized us to do anything we want literally, we could send all of the profits to you Rep. Capuano and no judge could stop us. Heck, if you look carefully at the wording HERA it even allows us to enjoy all of the benefits of a conservatorship and a receivership and none of the liabilities of either. We created a hybrid vehicle that the FDIC may want to consider when dealing with troubled banks; we call it a ‘conceivership.’ It enables the majority stakeholder to make a deal with the conceiver to ensure all profits go to them in perpetuity.’
“Imagine the reaction that would have brought though this is exactly what our government has claimed in the various lawsuits.”
We encourage you to take a wander over the blog to read the full post.