Obama to back wind down of GSEs


The President today will throw his support behind a congressional plan to wind down Fannie Mae (FNMA.OB -14%) and Freddie Mac (FMCC.OB -13.4%) over time (along with their implicit government guarantee), letting instead a private market grow to buy securitized loans from lenders.

One condition will be a guarantee of continued access to 30-year mortgages for borrowers, something House Republicans are willing to leave up to the markets.

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Comments (16)
  • DeepValueLover
    , contributor
    Comments (11177) | Send Message
     
    Anybody know the time frame for the wind down?
    6 Aug 2013, 01:18 PM Reply Like
  • amyers
    , contributor
    Comments (7) | Send Message
     
    Never
    6 Aug 2013, 01:26 PM Reply Like
  • RJKRJK
    , contributor
    Comments (190) | Send Message
     
    Starting on the fourth of Jubember and ending in the fall of 3724.
    6 Aug 2013, 01:30 PM Reply Like
  • pankaj123
    , contributor
    Comments (104) | Send Message
     
    How much weight he has? Does he know what is he talking about? He should have invested in Fannie or Freddie. What is a securitized loan when there is no security of the of the loan? He also wants to put a condition of 30 year,let all the congress men invest. I believe without government guarantee all housing loans will become sub-prime and unaffordable.Student loan is also a problem so can he make it without government guarantee? When politicians get in to any business they always make big mess like they have already made.
    6 Aug 2013, 01:37 PM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    It will never happen, the GSE are a necessary evil, what are they are going to do put 6 trillion usd into the Treasury balance sheet? That will push the country into bankruptcy, if there is little government involvement who is going to guarantee the debt, the private sector? Good luck with that, Mortgages rates will Sky rocket, as this cost will be past onto homeowners and future homeowners so tax Payers will be on the hook for life, isn't the idea of a wind down of GSE to Protect tax Payers? the government has to provide a backstop for the housing market otherwise say good bye to the housing recovery. Why reinvent the wheel? what are we going to see is higher regulation.
    6 Aug 2013, 01:45 PM Reply Like
  • philipmax
    , contributor
    Comments (420) | Send Message
     
    Great political ploy. A none starter.
    The only reason F&F exist is that private banks cannot fulfill the criterion of guaranteeing mtgs. An even greater idea, born in the depth of the Great Depression, was that the gov't underwrite this insurance. The result Fanny, and later, Freddie. They do/did their job superbly. Greedy management and political meddling nearly brought this country to another Great Depression.
    The solution is to revert to sound lending underwritten by F&F. Same as had worked for 80 years, thank you.
    6 Aug 2013, 03:57 PM Reply Like
  • speakyatruth
    , contributor
    Comments (51) | Send Message
     
    A wind-down probably won't happen now, given that this Congress is inclined to oppose everything President Obama supports.
    6 Aug 2013, 04:14 PM Reply Like
  • nahsa
    , contributor
    Comments (29) | Send Message
     
    I think it's all about confidence.

     

    Confidence in management.
    Confidence in the integrity of the notes.
    Confidence in the borrowers.

     

    When we had all three, f&f fulfilled their mandate and investors were rewarded....and the tax payers were never at risk.

     

    Remove those elements of confidence and you have the mess we now find ourselves in.
    6 Aug 2013, 04:26 PM Reply Like
  • BondGeek1
    , contributor
    Comment (1) | Send Message
     
    This administration hasn't been able to pass any major legislation WITHOUT stuffing it through Congress like Obamacare..Besides, this Congress can't even address Immigration reform, Healthcare reform, Budgets and now your telling me they'll work together to come up with Mortgage reform to replace FNMA & FRE? I think someone in the WH is probably back to his old ways of smoking some of the sweet tobacco again.....

     

    Let's think rationally about this. They're going to try to CREATE another structure that can provide liquidity to the mortgage market? FNMA & FREDDIE worked just fine until Congress and the Clinton administration forced them to purchase "subprime mortgages" back in 1999.
    Here's an easy fix:
    Force the largest 30 - 50 banks to inject additional liquidity into FNMA & FRE and become shareholders. Require them to hold the stock and then let's see how many try to stuff garbage mortgages into FNMA & FRE in the future...
    Result:
    1. The Federal Gov't & tax payers get paid back all of $188b borrowed with interest.
    2. FNMA & FRE continue to operate as they have. Providing liquidity to the mortgage market, especially since no one else is.
    3. We stop trying to reinvent two entities that have worked well for American homebuyers and banks needing access to mortgage lending liquidity.
    4. We stop trying to shut down two shareholder corporations that are very PROFITABLE.
    5. AIG, C, BAC, MS, GS, JPM, WFC and many of the others who received TARP paid back their lifelines with interest and are no longer under the Govt's thumb. Why should FNMA & FRE shareholders be treated any differently?

     

    Why is this so complicated?
    Why is Congress in such a rush to shut them down? Probably because there both profitable and investors/owners are wondering why the Gov't continues to confiscate all earnings...
    6 Aug 2013, 10:31 PM Reply Like
  • philipmax
    , contributor
    Comments (420) | Send Message
     
    I like the idea of TBTF banks holding shares in F&F. Perhaps we can push this concept to having them hold a percentage in relation to the banks mtge underwriting.
    7 Aug 2013, 09:06 PM Reply Like
  • cinvester
    , contributor
    Comment (1) | Send Message
     
    I find the timing of this announcement quite interesting, considering there has been an uptrend in the price of the stock, but a significant dip today. With earnings scheduled to be reported 8/8, why now? This is by design, not coincedence.
    7 Aug 2013, 07:29 AM Reply Like
  • nahsa
    , contributor
    Comments (29) | Send Message
     
    why now, indeed....and just ahead of the fmcc earnings...i smell a rat.
    7 Aug 2013, 10:26 AM Reply Like
  • JMstocks75
    , contributor
    Comments (249) | Send Message
     
    did AIG wind down, did BAC wind down, F&F already paid 95 billion back, once gov has there money will get out along with all the shares the have bought, do you agree?
    7 Aug 2013, 09:47 AM Reply Like
  • jimmywumsn
    , contributor
    Comments (28) | Send Message
     
    President Reagan : Government is not the solution to our problems, Government is the problem.
    7 Aug 2013, 09:54 AM Reply Like
  • JMstocks75
    , contributor
    Comments (249) | Send Message
     
    when Obama says wind down Fannie and Freddie, he means release control, the wall street media is trying to make you believe that that the business will be closed, share holders will just take there loses all those employees just go out of work, not happening
    8 Aug 2013, 09:14 AM Reply Like
  • svy
    , contributor
    Comments (58) | Send Message
     
    Question:

     

    For the upcoming federal debt limit debate expected in early Feb 2014;

     

    If your money market fund had some investment in GSEs - fannie mae discount notes, federal home loan bank discount notes, federal home loan banks, federal home loan mortgage corp., federal national mortgage assn. & freddie mac discount notes with maturity dates in Feb 2014

     

    If the US government did "default" would these GSEs be impacted (e.g. valued less then a dollar) because their in a conservatorship run by the FHFA since 2008???

     

    whereas before 2008 these GSEs were separate from the US government....
    15 Nov 2013, 01:28 PM Reply Like
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