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Fannie Mae and Freddie Mac about to take off big time.
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thombiz



Joined: 25 Jun 2007
Posts: 618
Location: Corpus Christi

PostPosted: Wed Oct 29, 2014 9:43 am    Post subject: Fannie Mae and Freddie Mac about to take off big time. Reply with quote

The Sweep Amendment to the Preferred Stock Purchase Agreement is about to be ruled unconstitutional and will have to be reversed. Profits will be returned to Fannie and Freddie. The stock is $2.30 as of 10/29. That low price is driven by Fannie and Freddie not being allowed to retain profits. Very Soon, that will be set right by the US Code laws of Restitution. Very soon the Fannie and Freddie stock will go to $40 or more. There is no downside to this. The rule of law mandates it. Bob T.

Go here: http://timhoward717.com/
Click on Continuing Dialogue and scroll way down(38 posts of so) to where my important posts start with "Hi, I am Bob Thompson and I post under the user name of thombiz...... Please read all the way to the bottom of that chapter.

Then close the tim howard website then reopen it and scroll down until you come to a posting dated Oct 21, '14 "FREDDIE MAC CEO DONALD LAYTON.... CLICK on "110 Comments" and scroll down to the 16th posting of Oct 23 8:45am. Read down until you realize you have read all you need to read.

There are government published documents proving everything I claim.

Mac, I hope you read this. Your analytic mind will have a field day with this one. Consider this an invitation to get involved.


Last edited by thombiz on Wed Oct 29, 2014 3:30 pm; edited 1 time in total
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mac



Joined: 07 Mar 1999
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PostPosted: Wed Oct 29, 2014 2:46 pm    Post subject: Reply with quote

Hmm, too complicated to try to understand just before a bike ride. Maybe later. I don't really make any decisions about my investments, I pay someone to do that--and I tell him not to invest in American oil and coal companies. Wonder why?
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thombiz



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Location: Corpus Christi

PostPosted: Wed Oct 29, 2014 3:11 pm    Post subject: Reply with quote

Mac, you have the kind of mind which can validate on invalidate this. Either way it will help a lot of good people. Bob T.
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mac



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PostPosted: Thu Oct 30, 2014 3:48 pm    Post subject: Reply with quote

So Bob, I couldn't find continuing dialogue, and the second link you gave was such a convoluted chain of back and forth that I gave up. I did find this blog on the Wall Street Journal site that gave me some idea of what was going on:

http://blogs.wsj.com/moneybeat/2014/10/29/government-pushes-to-put-fannie-and-freddie-lawsuits-on-ice/

But I couldn't find any tentative writs, or even the briefs before Judge Sweeney. What I understand, rather poorly from this information, is that there are a number of ongoing investor lawsuits over their investments in Fannie and Freddie. To be sure, those organizations were eventually caught up both in the subprime loan fiasco and in scandals of their own. The Reps tried to blame the melt down on Democratic efforts to increase home ownership for the poor and Freddie and Fannie, ignoring that the scope of their investments in sub-primes were relatively small and relatively late. Standard blame the innocent stuff in the Reps responding to the meltdown which resulted directly from Rep de-regulation. But I fail to see the nub of the issue before Judge Sweeney. Enlighten me with a less convoluted path.
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thombiz



Joined: 25 Jun 2007
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Location: Corpus Christi

PostPosted: Thu Oct 30, 2014 4:52 pm    Post subject: Reply with quote

You definitely have a beautiful mind. Try this hookup:
http://timhoward717.com/continuing-dialogue-ideasstrategies/

and go down 38 posts until you get to my post which starts "Hi, I'm Bob Thompson and I post under .......

It is very important that you read from there, all the way to the bottom of that chapter.

When you get to the bottom, if you want more get back to me.

My posts will establish without question that Fannie and Freddie (FnF) were put into conservatorship as required by a law (The Housing Economic Recovery Act of 2008 (HERA)), FHFA was created to direct the conservatorship of FnF following a specific set of laws, limitations, and goals. HERA requires the Conservator to use better supervision and regulation to set FnF in sound and strong condition. At the time FnF were put into conservatorship, they had debts totaling $14.9 billion. Within a month, the Bush Admin directed FnF to purchase $40 billion dollars a MONTH of troubled mortgages. This quickly rose to a total of $187 billion. Not only were FnF required to buy the troubled mortgages, they had to pay 10% interest on the money they used to buy these troubled mortgages.

Bush relinquishes the presidency and Obama takes over. Wanting to make his mark on housing finance along with health care, he publishes a set of White Papers of Feb 2011. White Papers are just informational and solution sheets various entities give to Congress to help them better understand and solve a problem. They are not laws. Obama's White Papers were one of several plans for consideration by Congress. Congress never voted or developed the White Papers of Feb 2011. Congress never passed a housing reform law. The White Papers propose winding down FnF and eliminating them and thus eliminating their troubled business plan so the Obama Admin could create new housing finance infrastructure. Again, just White Papers never made into law, but more importantly, they were implemented by Obama thru the Treasury and FHFA. The White Papers became the active plan to follow to wind down FnF. On Feb 21, 2012 the FHFA published the Strategic Plan for the Conservatorship of FnF. In that plan, they first redefine the term conservatorship to include winding up of affairs. Then they state they are doing it to eliminate their flawed business plan and establish new housing finance infrastructure. The term conservatorship is defined in the US CODE which is a catalogue of laws for the US to facilitate the orderly conduct of affairs in the US. You cannot redefine conservatorship as defined in the US CODE without a law passed by Congress. Not even Obama can redefine conservatorship. This is proof of intent to commit fraud. Only Congress can pass a law modifying a law in the US Code.

The quarterly reports, Q1 and Q2 of 2012 of FnF expose that FnF are becoming very profitable, so profitable that they returned $23 billion to the Treasury. When the Treasury saw what was happening they realized that if FnF were to become profitable, they would never be able to be wound down because there is no law in the land they lets a conservator wind down a profitable company. On Aug 17, 2012 knowing FnF were about to become profitable, the Treasury directed a modification be made to the contract between FnF and FHFA which would require FnF give every cent of their profits to the Treasury and make sure the shareholders of FnF would never have access to any profits ever.

All of this supported by documents published by the governmental agencies.

HERA was a law, but Obama directed that his White Papers be used instead of following the law FHFA was required to follow. The White Papers are the exact opposite of HERA. HERA requires FnF be put in sound financial condition, the White papers require they be wound down and eliminated. This is a fraud. This is unconstitutional. This cannot remain. In the US Code there are laws dictating the ways to correct a fraud. Specifically, there are specific laws when it is federal fraud. The laws governing restitution in the event of fraud seek to make injured parties whole. In this case FnF and the shareholders. The fraud is just now being exposed. I exposed it in my writings that you will read. This info is the first known exposure of the fraud in the world. The stock price is $2.10 per share. Restitution is required by law. When the market finds out FnF are going to be made whole the stock will soar to $40 to $100 per share.

Please, check it out.


Last edited by thombiz on Fri Oct 31, 2014 11:38 pm; edited 2 times in total
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mac



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PostPosted: Thu Oct 30, 2014 7:37 pm    Post subject: Reply with quote

A convoluted thread, but at least I now understand your argument. Let me caution you that I know environmental law very well, and have been involved in lots of lawsuits--but I am not a lawyer. My understanding of financial law is very weak. But there is something that I think is missing from your analysis, and that is TARP. I don't remember exactly how politics landed on Freddy and Fannie, and I'm not much interested in researching that. Banks didn't much like them as lower-cost competition, bullied them to get into the sub-prime market, blamed them when the market turned out to be largely fraudulent, and the Reps had long knives out for them. It is not clear from what I've read in your thread whether Freddy and Fanny are profitable as a matter of fact, or just that they've dug themselves a long way out of an even deeper hole. And it appears that they were used to Federalize and absorb bad loans, which, I think, brings in TARP. Under TARP, which was Congressionally authorized, the Secretary has an immense amount of power and discretion in Section 101(a) "The Secretary is authorized to establish the Troubled Asset Program to ...purchase troubled assets from any financial institution..."

http://www.gpo.gov/fdsys/pkg/PLAW-110publ343/pdf/PLAW-110publ343.pdf
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mac



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PostPosted: Thu Oct 30, 2014 7:43 pm    Post subject: Reply with quote

This provides some perspective:

Quote:
Mortgages’ Future Looks Too Much Like the Past
By GRETCHEN MORGENSON
Published: March 23, 2013

IN a perfect world, policy makers, legislators and concerned Americans would have spent the last few years conducting an honest dialogue about two important issues: how to resolve Fannie Mae and Freddie Mac, the government-owned mortgage finance giants, and how to create a housing finance system that would serve borrowers without imperiling taxpayers.

But ours is an imperfect world, and discussions about these questions have taken place mostly behind closed doors in Washington. The rest of us Americans, who guarantee the mortgage market, have not been given much of a say.

This is a pity because the future of housing finance in this country seems to be coming down to two taxpayer-backed concepts. One is the status quo, with Fannie Mae and Freddie Mac continuing to back the vast majority of mortgages. The other is a newly conceived public guarantor with some of the same problems that got Fannie and Freddie into trouble.

Let’s begin with the status quo. The taxpayer rescue of Fannie and Freddie in September 2008 has cost $137 billion so far. While this has been paid down from an initial $187.5 billion, taxpayers aren’t likely to get their money back anytime soon. Last fall, the regulator charged with overseeing Fannie and Freddie estimated that the taxpayer bill for the companies could be $200 billion by the end of 2015.

Still, Washington has shown little interest in winding down Fannie and Freddie. The ostensible reason is that there would be no mortgage market without them; private lenders are still unwilling to make home loans that they want to hold as investments, so Fannie and Freddie still have to buy or guarantee them.

But doing nothing also serves other interests. Since 2011, any increase in the guarantee fees the companies receive when backing a mortgage goes to the Treasury, not to repay taxpayers. The companies, therefore, have become a government piggy bank.

There is another group that would prefer Fannie and Freddie to remain as is: the former executives who still receive benefits from the companies and the taxpayers who own them.

According to documents reviewed by The New York Times, $25.3 million in pension payments went to 1,785 former Fannie executives last year; an additional $12.7 million went to 871 former Freddie officials.

Had the companies not been rescued and instead filed for bankruptcy, the former executives’ pensions would be the obligation of the Pension Benefit Guaranty Corporation, financed by corporations whose plans it backs. Instead, taxpayers have been on the hook for five years.

Among the retirees receiving pensions courtesy of the taxpayer are Franklin D. Raines, Fannie Mae’s former chief executive; J. Timothy Howard, the company’s former chief financial officer; and Leland C. Brendsel, former chief executive of Freddie Mac.

All three men were ousted from their companies amid accounting scandals — Freddie’s in 2003 and Fannie’s a year later. All were paid handsomely through their tenures. Between 1998 and 2004, for example, Mr. Raines received $90 million in compensation, regulators found. Mr. Howard received $30 million over the period. When Mr. Brendsel left Freddie Mac, he was earning $1.2 million a year in salary.

Even so, Mr. Raines receives a pension of $2,639 from taxpayers each month, the documents show; Mr. Howard receives $4,395 and Mr. Brendsel $8,039. Requests for comment from the former executives’ lawyers were not returned.

The documents show that taxpayers spent $11 million last year on medical costs for 1,392 Fannie and Freddie retirees. And from September 2008 through 2012, taxpayers also spent $114 million for legal bills racked up by former executives and directors testifying in lawsuits relating to the accounting scandals or financial crisis inquiries.

These payments are governed by contracts struck before Fannie and Freddie fell, so there is little that anyone can do to revoke them. But Representative Randy Neugebauer, a Texas Republican on the House Financial Services Committee, said they made him “nail-biting mad.” He added: “Taxpayers have put all this money into these entities. The attorneys have gotten a lot richer and the executives that led these organizations before their demise are still getting big paychecks. It’s very frustrating.”

LET’S move on to the second option for housing finance that’s gaining traction. It is outlined in “Housing America’s Future: New Directions for National Policy,” a report published last month by the Housing Commission of the Bipartisan Policy Center.

While the authors of the report contend that it was intended to set a new direction for federal housing policy, its reliance on a government backstop is awfully familiar.

The report calls for replacing Fannie and Freddie with a public utility to guarantee a vast number of home mortgages against default. The loan size to be covered is unspecified, but the commission suggests that it should be less than the current Fannie and Freddie loan limit of $417,000 in most markets.

Under the plan, the taxpayer-backed insurance would kick in only after private-sector participants had taken losses. For example, private mortgage insurers would have to hold enough capital to back loans even if home prices declined by 35 percent. And the guarantor’s insurance fund would be made up of premiums collected from borrowers.

These details differ from the broken system that the commission aims to replace, but there are many similarities.

For example, the plan requires the government to be sophisticated at pricing the risk in the mortgages it will back. If it isn’t, the premiums it receives will be insufficient to pay future loss claims.

This sophistication is not a given. Neither Fannie nor Freddie has been adept at setting an appropriate price for their guarantees — that’s why they’re choking on more than $100 billion in losses. Why would a new public guarantor do the job any better?

The report also fails to address who will monitor the guarantor for fraud. That is a concern to Steve A. Linick, the inspector general at the Federal Housing Finance Agency, the conservator for Fannie and Freddie.

“Under the proposal, the significant role now played by Fannie and Freddie would be diffused through multiple private-sector entities,” Mr. Linick said in an interview. “While this might make risk less concentrated, the challenge of managing risks across a number of parties will have to be addressed.”

That the commission recommends a taxpayer-backed solution isn’t surprising, given its makeup. Six of its 22 members and consultants either hail from Fannie or Freddie or work at institutions that received major financing from the companies before they collapsed.

Asked about that composition, a commission spokeswoman said that the diverse group of experts “were not selected solely on the basis of past affiliations.”

Still, the Fannie and Freddie DNA in the commission raises questions about whether it seriously considered any outcome that excluded a government backstop. I asked Nicolas P. Retsinas, a member of the commission who is a senior lecturer at the Harvard Business School, about the risk to taxpayers. A fair concern, Mr. Retsinas said, adding: “The commission believes in the continued importance of homeownership and there had to be some role for the government to preserve that option for middle-income families.”

Wealthy families will also benefit from the guarantor. And the taxpayer, under both the commission’s plan and the status quo will be left with a more significant role than many may have in mind.


Source is New York Times business section, March 23, 2013


Last edited by mac on Thu Oct 30, 2014 7:48 pm; edited 1 time in total
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thombiz



Joined: 25 Jun 2007
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Location: Corpus Christi

PostPosted: Thu Oct 30, 2014 7:47 pm    Post subject: Reply with quote

HERE IS A CLEANED UP VERSION OF WHATS FOUND IN THE TIM HOWARD BLOG:

Hi, Im Bob Thompson and I post under the user name “thombiz”. My research seems to be sending me in a direction somewhat different from others and it is a continuing dialog interrelated. For this reason I am putting the posts all together here. Judge Lamberth dismissed on Sept 30, ‘14 some stockholder lawsuits saying HERA was so badly written that it gave the Treasury extreme powers. I didn’t know HERA so I studied it to see if he was correct. The following came from that search for knowledge.
HERA, FHFA, and Conservatorship
The problem as I see it has to do with HERA and the Treasury. HERA gave the Treasury broad powers to save the national economy. The tools to do this were FnF. They were the two most effective tools to use to save the “too big to fail” banks from collapse. By using FnF, the Treasury could direct them to continue to buy the subpar mortgages giving the “too big to fail” banks a chance to recapitalize, effectively saving the national economy.
To use FnF in this way, the Treasury had to choose a path to follow. One path was expropriation. Another path was putting FnF into conservatorship. Each path is regulated by a specific set of “rules of law” established for the orderly conduct of affairs. If the Treasury had chosen expropriation, they would have followed the 5th Amendment to the constitution and purchased all the preferred and common stock at fair market value, then assumed management of FnF to guide them thru the process of purchasing more subpar mortgages, giving the “too big to fail” banks an opportunity to recapitalize all the while doing all the things necessary to deal with the failing mortgages. When this was completed, the Treasury thru FHFA could proceed with the orderly “wind down” and liquidation of FnF.
The Treasury did not choose the expropriation path, they chose conservatorship using FHFA as conservator. They chose conservatorship presumably because it was a process they were familiar with as they had used it effectively in the savings and loan scandals of the ‘80’s and 90’s. The conservatorship path comes with it’s own set of “rules of law”. These rules establish a “conservator” to assume management of FnF during which time the stockholders relinquish their rights. As conservator, the FHFA is legally bound to “preserve and conserve” the assets of a company and put it back in sound financial condition. In an FHFA publication dated 9/07/2008: http://www.fhfa.gov/Media/PublicAffairs/Pages/Fact-Sheet-Questions-and-Answers-on-Conservatorship.aspx In a pull-down menu at the top under “Conservatorship” the publication defines the FHFA’s goal as “ Help restore confidence, enhance capacity to fulfill mission, and mitigate systemic risk that contributed directly to instability in financial markets.” Back on the front sheet of the same publication, down near the bottom of the publication, the questions involving liquidation are presented:
Q: What happens if the Company is liquidated?
A: Under a conservatorship, the Company is not liquidated.
Q: Can the Conservator determine to liquidate the Company?
A: The Conservator cannot make a determination to liquidate the Company, although, short of that, the Conservator has the authority to run the company in whatever way will best achieve the Conservator’s goals (discussed above). However, assuming a statutory ground exists and the Director of FHFA determines that the financial condition of the company requires it, the Director does have the discretion to place any regulated entity, including the Company, into receivership. Receivership is a statutory process for the liquidation of a regulated entity. There are no plans to liquidate the Company.
Q: Can the Company be dissolved?
A: Although the company can be liquidated as explained above, by statute the charter of the Company must be transferred to a new entity and can only be dissolved by an Act of Congress.
These questions and answers help define some of the “rules of law” controlling the activities of the conservator with respect to FnF.
Somewhere between 9/07/2008 and 8/17/2012 the concept of “winding down” (liquidation) was introduced into the conservatorship equation. I think it would be very illuminating to know who first introduced the concept of “winding down” to the conservatorship, but I do not know who first introduced it, and I do not know who determined that “winding down” should be “expedited” but that is the very title of the sweep amendment announcement “Treasury Department Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac”. See:
http://www.treasury.gov/press-center/press-releases/Pages/tg1684.aspx
To “wind down” or “liquidate” the company is not an option under conservatorship. Only under certain “statutory grounds” can the director even put the company in receivership as stated above in the FHFA’s Q&A’s. To liquidate FnF, “by statute, the charter of the Company must be transferred to a new entity and can only be dissolved by an Act of Congress”.
In effect, the Treasury, in an attempt to set the “expedited wind down” of FnF have reverted to the path of expropriation and have chosen to ignore the “rules of law” for conservatorship as well as the “rules of law” for expropriation. The Treasury has acted as though it has an “Act of Congress” to dissolve” FnF but as far as I know there is no such provision in HERA. Even if there was such a provision, the Treasury would first have to unwind the conservatorship and initiate an expropriation of FnF following the “rules of law”.
After studying the HERA, it should be added that the Director as head of the conservatorship can liquidate (wind down) FnF but he must first order that FnF be put in receivership. The Sweep Amendment should not be valid because there was no order of receivership of FnF by the Director, so there was no vehicle to “expedite the wind down” of FnF. No receivership equals no legal wind down.
Sources used to validate claim of wind down: 8/17/2012 The sweep amendment was accompanied by a Treasury announcement, “Treasury Department Announces Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac
See: http://www.treasury.gov/press-center/press-releases/Pages/tg1684.aspx
There was no receivership at the date of this announcement.
WIND DOWN
Since I did not have a date for the first recorded use of the terms “Wind Down” FnF, I went on a search . The first instance of the mention of “wind down” I’ve been able to identify comes from the Administrations White Papers dated February 2011. see:
http://www.treasury.gov/initiatives/documents/reforming%20america's%20housing%20finance%20market.pdf

QUOTE:
The White Papers “lay out the Administration’s plan to reform America’s housing finance market to better serve families and function more safely”. “Under our plan, private markets – subject to strong oversight and standards for consumer and investor protection – will be the primary source of mortgage credit and bear the burden for losses.”
Page 2. The Administration will work with the Federal Housing Finance Agency (“FHFA”) to develop a plan to responsibly reduce the role of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) in the mortgage market and, ultimately, wind down both institutions.
“We believe that under our current Preferred Stock Purchase Agreements (PSPAs), there is sufficient funding to ensure the orderly and deliberate wind down of Fannie Mae and Freddie Mac, as described in our plan.
“The Administration will work with FHFA to determine the best way to responsibly reduce Fannie Mae and Freddie Mac’s role in the market and ultimately wind down both institutions, creating the conditions for private capital to play the predominant role in housing finance.”
“As the market begins to heal and private investors return, we will seek opportunities, wherever possible, to accelerate Fannie Mae and Freddie Mac’s withdrawal.”
UNQUOTE
I thought I read somewhere that the Director is required to perform his duties without undue influence from other branches of the government.
I copied this from a post on TIMHOWARD717’s blog:
We know that Congress felt strongly enough about the potential for misguided political meddling with the GSE’s that they wrote into HERA: “When acting as conservator or receiver, (FHFA) shall not be subject to the direction or supervision of any other agency of the United States … in the exercise of the rights, powers, and privileges of the Agency.” Judge Lambert stated in his ruling that the plaintiffs only “briefly” argued the FHFA violated this prohibition, and that they failed to produce evidence to back their claim.

FURTHER DIGGING
It goes on. I keep digging. I have read and reread portions of HERA, the Housing and Economic Recovery Act of 2008 to find a definition of the purpose of HERA. The opening line of the act says “An Act To provide needed housing reform and for other purposes.”
I went to Wikipedia for a definition and purpose. Wikipedia states “ It was intended to restore confidence in Fannie Mae and Freddie Mac by strengthening regulations and injecting capital into the two large U.S. suppliers of mortgage funding.” “ Enactment of the Act led to the government conservatorship of Fannie Mae and Freddie Mac.”
TITLE I of HERA establishes the reform of regulations of GSEs thru the the improvement of safety and soundness supervision of “The Federal Housing Enterprises Financial Safety and Soundness Act of 1992”.
http://www.hud.gov/offices/adm/hudclips/acts/hcdatitle13.txt
In other words, HERA is intended to stabilize and strengthen the GSE’s thru improvements in supervision over those controls established by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.
To understand what that means, you must first find out what in contained in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.
In the first two statements of the act, the importance of the GSE’s are established:
TITLE XIII – GSE’s
The Congress finds that –
(1) FNMA and FMCC, and the Federal Home Loan Banks have
important public missions that are reflected in the statutes and charter Acts
establishing the Banks and the enterprises;
(2) because the continued ability of FNMA and FMCC to accomplish their public missions is important to providing housing in the United States and the health of the Nation’s economy, more effective Federal regulation is needed to
reduce the risk of failure of the enterprises;
It is clear that the Administration’s White Papers of Feb 2011
http://www.treasury.gov/initiatives/documents/reforming%20america's%20housing%20finance%20market.pdf
and the FHFA Sweep Amendment direct a wind down of the GSE’s in breach of their fiduciary duties to make improvements in the supervision of the GSE’s to direct them in the important task of providing housing in the US and improving the health of the Nation’s economy. Instead of providing improvements in supervision, they chose to wind down and eliminate the GSE’s in blatant disregard for the importance of the GSE’s established by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 and hence HERA.
It should be noted that while the Administrations White Papers came out in Feb 2011, HUD and the Treasury In February of 2011 released a joint report to Congress recommending three possible courses of action to restore liquidity to the housing market, protect taxpayers from future bailouts and promote affordable housing—all 3 courses called for winding down the GSEs. Most people took this as an endorsement of the Administration’s White Paper plan to wind down the GSE’s. But broad support for eliminating the GSEs remained tenuous, as noted in the REVIEW OF BANKING & FINANCIAL LAW.
These plans to wind down the GSE’s were never enacted into law, as they were just proposals, however FHFA as conservator did incorporate portions of them in the conservatorship of the GSE’s and that incorporation lead to the Sweep Amendment or the expedited wind down of the GSE’s. Again, these actions are opposite of the laws incorporated in HERA and specifically those purposes contained in The Federal Housing Enterprises Financial Safety and Soundness Act of 1992” on which HERA is based.
http://www.hud.gov/offices/adm/hudclips/acts/hcdatitle13.txt

COMEDY OF ERRORS
The FHFA’s management of FnF is like a comedy of errors! Each management decision since the enactment of HERA has been created and directed by people who honestly felt their solution was best. It didn’t seem to matter that the decisions did not follow the directives of HERA which were to “Help restore confidence (in FNF), enhance capacity to fulfill mission, and mitigate systemic risk that contributed directly to instability in financial markets” as stated in the FHFA’s own website. It didn’t seem to matter that Congress found FnF to have important public missions that is important to provide housing and contribute to the health of the Nation’s economy as enacted in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992′ which is an integral part of HERA. It didn’t seem to matter that the very same Act of 1992 required that the entity regulating FnF should have sufficient autonomy from FnF and special interest groups. It didn’t seem to matter that the same Act of 1992 required more effective “regulation” to reduce the risk of failure of FnF.
HERA was enacted on July 30, 2008 under the Bush administration with the stated goal of restoring confidence in FnF, and then 3 months later on October 11, 2008, the Bush administration directed Federal regulators to have FnF start purchasing $40 BILLION PER MONTH of underperforming mortgage bonds. The Bush administration was expanding its options to buy troubled financial assets and resuscitate the U.S. economy. They thought they were doing the best thing. See: http://www.bloomberg.com/apps/news?sid=aDjJYMSphyM0&pid=newsarchive
It didn’t seem to matter that HERA had the goal of restoring confidence in FnF, it was best that they be required to take on $40 BILLION per MONTH of underperforming mortgage bonds.
Fast forward to the Obama Administration and somebody decided that FnF had mismanaged their portfolios so badly that they were riddled with bad mortgages to the tune of $187 BILLION and they would be unable to repay their draws from the Treasury, let alone pay the interest on those draws. In an effort to save the taxpayers, the Obama Administration decided the best course was to eliminate FnF by winding them down as is proofed by the Obama Administration’s White Papers published on February 2011. It didn’t seem to matter that FnF were in conservatorship and this required by law that the FHFA preserve and conserve FnF and put them back in sound financial condition thru more effective regulation. It didn’t seem to matter that the only way to wind down FnF was to put them into receivership. It didn’t seem the matter that HERA required the Director of FHFA to order such reports as were necessary to establish without fail the fiscal condition of FnF. It didn’t seem to matter that these same reports would have accurately determined that FnF were about to be very profitable. The people in charge were already convinced they were doing what was best, so they modified the terms of the conservatorship to create the sweep amendment on Aug 17, 2012 to expedite the wind down FnF.
It didn’t seem to matter that FnF turned the fiscal corner and in November of 2012 declared substantial profits. It didn’t seem to matter that those profits were generated by the very same requirements of HERA and the Act of 1992 which was “more effective regulation”. It doesn’t seem to matter that Judge Lamberth declared that HERA gives the Director of FHFA very broad powers, when it doesn’t say that anywhere in HERA or in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 as near as I can determine. See Section 1313 of the Act of 1992. It clearly states the Director is to oversee the prudential operations of each regulated entity. And now, it doesn’t seem to matter that Congress’s findings in the Act of 1992 are still valid today, that FnF have important public missions that is important to provide housing and contribute to the health of the Nation’s economy.
It is certainly a comedy of errors, but it’s not really that funny. And it doesn’t have to be. Reverse the Sweep Amendment, end the wind down and get back to the task set by HERA and that is “more effective regulation”. More effective regulation has proved to serve the taxpayers and has proved to be profitable.

FHFA FREE FROM INFLUENCE OF OTHERS WHILE CARRYING OUT HERA
I think back to a speech I heard Obama giving where he said (I paraphrase), “Fannie and Freddie have flawed business plans which make them unsustainable (presumably because they are riddled with debt) and for this reason they must be wound down”. Then I remember October 11, 2008 when the Bush Administration directed FHFA to have FnF start buying $40 Billion of underperforming mortgages every month. We all go off half cocked now and then but the Bush Administration and the Obama Administration seem to be especially good at it.

The Flawed Business Model
On July 24, 2008 HERA was enacted creating FHFA with Lockhart as Director. On Sept 6, ’08 Lockhart announced at a press conference that FnF were put into conservatorship. At the same press conference, Treasury Secretary Paulson said he agreed with the need to put FnF into conservatorship. At the time, FnF had debt totaling $14.6 billion. Paulson stated that “conservatorship was the only form in which I would commit taxpayer money to the GSEs”. See: http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac#Background_and_financial_market_crisis
Paulson chose conservatorship and NOT expropriation. In the same press conference, Paulson further stated “I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction.” “The same day, the then Federal Reserve Bank chairman Bernanke stated in support: “I strongly endorse both the decision by Director Lockhart to place FnF into conservatorship and the actions taken by Secretary Paulson to ensure the financial soundness of those two companies.”
So what is the flawed business model? Reuters describes it as “a troubled business model with conflicts of interest between private profits and public services”.
http://www.reuters.com/article/2008/09/08/fannie-freddie-paulson-idUSNYE00035720080908
Most people see it as an implied Federal backstop guarantee for the GSE’s, but it cuts both ways. The GSE’s become a tool for the government to attempt to save the US economy buy directing them to purchase underperforming mortgages.
FnF had combined losses of US$14.9 billion prior to being taken into conservatorship on Sept 7, 2008, under the guise of “market concerns about their ability to raise capital and debt which threatened to disrupt the U.S. housing financial market”. Under conservatorship, the Treasury committed to invest as much as US$200 billion in preferred stock and extend credit through 2009 to keep the GSEs solvent and operating.
Wikipedia: “With a growing sense of crisis in U.S. financial markets, the conservatorship action and commitment by the U.S. government to backstop the two GSEs with up to US$ 200 billion in additional capital turned out to be the first significant event in a tumultuous month among U.S.-based investment banking, financial institutions and federal regulatory bodies.” September 15, 2008, Lehmann Brothers filed for bankruptcy with intent to liquidate its assets. The collapse was the largest investment bank failure since 1990. In the same month, Merrill Lynch accepted a $50 billion purchase offer from Bank of America, a big drop from a year-earlier market valuation of $100 billion. A credit rating downgrade of AIG lead to a September 16, 2008 rescue agreement with the Federal Reserve Bank of $85 billion.
On October 11, 2008 the Bush Administration directed FHFA to have FnF start buying $40 Billion of underperforming mortgages every month. The GSE’s which had been backstopped by the government were now being used by the Treasury to backstop the national economy. It cuts both ways.

OVERSIGHT COMMITTEES
Does it ever occur to you that the government is passing all these laws, which get passed down to the governmental agencies to implement, but somehow, along the way, these agencies substantially change regulations without seeking public comment. Well, that is exactly what the Supreme Court is currently considering in the case of Perez vs. Mortgage Bankers Association. See: http://www.nationalmortgagenews.com/news/regulation/loan-officer-overtime-case-has-much-broader-reg-implications-1042852-1.html
An anonymous post referenced ihub and this: http://www.americanbanker.com/issues/179_197/supreme-court-takes-up-fight-over-regulatory-powers-1070458-1.html which is the same as the article I reference above. This post may be one of the most important posts on this whole blog. Thank you, thank you, thank you Mr/Mrs/Ms poster. You hit the nail right on head!
The referenced articles are at the very heart of the truths we pursue. In the implementation of HERA did the Bush and Obama Administrations, the Treasury, and FHFA substantially changed the purpose, the scope, and the implementation of HERA? Did they substantially change HERA so much that it is almost unrecognizable from it’s original intent? Isn’t this really what the pursuit of truth for the GSE’s is all about? Let us together pursue the truth and examine the facts. In the following I will strive to remain dispassionate about the pursuit and present only facts. If a statement is in quotes, that means it is copied word for word from HERA. I will avoid “cherry picking” and provide what is written in the law.
What HERA says: “An Act To provide needed housing reform and for other purposes. This Act may be cited as the ‘‘Housing and Economic Recovery Act of 2008’’.”
Sets the purposes:
1. provide needed housing reform
2. provide for other purposes
3. directs Housing Recovery
4. directs Economic Recovery
Division A of HERA is “Housing Finance Reform”. It amends “Federal Housing Enterprises Financial Safety and Soundness Act of 1992”. Title 1 of Division A is “REFORM OF REGULATION OF ENTERPRISES” and it establishes FHFA as an “independent” agency of the government to oversee FnF. FHFA’s purpose was to put the GSE’s into conservatorship and provide “Improvement of Safety and Soundness Supervision”. The Director of FHFA was given “general regulatory authority” over FnF to assure the “purposes of the act” and the other applicable laws are carried. The authority of the Director was not limited to his primary tasks which were to ”ensure that”:
“1. each GSE operates in a safe and sound manner, including maintenance of adequate capital and internal controls;
2. the operations and activities of each GSE foster liquid, efficient, competitive, and resilient national housing finance markets
3. each GSE complies with this title and the rules, regulations, guidelines, and orders
issued under this title and the authorizing statutes;
4. each GSE carries out its statutory mission only through activities that are authorized
under and consistent with this title and the authorizing statutes;
5. the activities of each GSE and the manner in which such regulated entity is operated
are consistent with the public interest.’
Authors note: The above are all taken from HERA, now lets see what is in the “Federal Housing Enterprises Financial Safety and Soundness Act of 1992”.
The FHFA was established as an independement agency of the Federal Government, charged with the task of carrying out HERA. HERA is an amendment to the Act of 1992. The Act of 1992 says: “more effective Federal REGULATION is needed to reduce the risk of failure of the enterprises” and “an entity regulating the GSE’s should have sufficient autonomy from the enterprises and special interest groups”. The duty of the (FHFA) Director shall be to ensure that the enterprises are adequately capitalized and operating safely, in accordance with this title.
The above sets the scope and purpose of HERA. The remainder of HERA and the Act of 1992 is mostly boiler plate which deals with the exact way in which the scope and intent of HERA are to be carried out.
Now, the Increased Debt
The GSE’s debt when they were put into conservatorship was $14.6 billion. This debt was directed by the Bush Administration, the Treasury, and FHFA to be increased to $187 billion thru the purchase of underperforming mortgage securities.
Presumably, this purchase of underperforming mortgage securities falls under the scope of “economic recovery”. The problem is…there is no specific definition in the act of what constitutes “economic recovery” or what measuring device would be used to determine the success of the economic recovery.
Buying underperforming mortgage securities increased the GSE’s debt to a whopping 12.8 times what it originally was!!! Then to top it off, the Treasury directed that the GSE’s pay 10% interest each year as interest on the 12.8 times debt they were forced to add to their books. If the debt hadn’t been increased by $172 billion, the GSE’s would have been paying interest on the $14.6 billion which would have been $1.46 billion per year, instead, they were being charged interest on the $187 billion which would be more than the total debt they had when put into conservatorship.
Original Debt: $14.6 billion Interest @10%= $1.46 billion/year
Added Debt: $172 billion Interest @ 10%= $17.2 B/year + interest on $14.6 B
The interest every year of the added debt is more than the total original debt!
Paying the interest of 10% on $14.6 billion is a cakewalk compared to the interest on $186 billion.
Then, the FHFA determines that the GSE’s have so much debt that they can’t even pay the interest let alone the principal, they should have never been allowed to incur such massive debt. Hell, they can’t even pay the interest on the debt, so they must expedite the wind down so the Treasury can be repaid for the infusion of money it invested to save the GSE’s. Thus, FHFA created the “sweep amendment”.
So…..did the Bush Administration materially change the purpose, the scope, and the implementation of HERA when it directed the GSE’s to purchase $40 billion worth of underperforming mortgage securities each month?
1. Did the FHFA improve the safety and soundness supervision of the GSE’s or did it allow special interests like the Bush Administration to direct the GSE’s to increase their debt 12.8 times it’s original size? Did this materially change the scope of HERA where it calls for “Improvement of Safety and Soundness Supervision”. Did the FHFA Director ensure that each GSE operates in a safe and sound manner, including maintenance of adequate capital? Or did he allow their debt to grow so large that they were unable to pay the interest on that debt? Did the increase of the GSE’s debt comply with HERA or did it change the scope of HERA?
Similarly,
1. Under the conservatorship did the Director supervise the GSE’s to achieve the FHFA’s own stated goals which were to “ Help restore confidence, enhance capacity to fulfill mission, and mitigate systemic risk that contributed directly to instability in financial markets.” Or did the Director supervise the GSE’s in such a way as to loose confidence in the GSE’s ability to carry out their mission, or reduce their capacity? Did this alter the purpose of HERA?
2. Did the Director meet the purpose of conservatorship which was “bringing the Company back to financial health.” http://www.fhfa.gov/Media/PublicAffairs/Pages/Fact-Sheet-Questions-and-Answers-on-Conservatorship.aspx or did the Director allow the GSE’s to become so debt ridden that it was determined that is was better to wind them down in lieu of bringing them back to financial health? Did this alter the directives of HERA? Did the Director put the GSE’s in “sound and solvent condition” or not? Or did he allow the opposite to happen? Did he enforce HERA?
3. Did the Director manage the sweep amendment to expedite the wind down of the GSE’s under conservatorship or did he first declare cause to put the GSE’s in receivership, then put them in receivership to wind them down? Does elimination of the GSE’s fulfill the intent of HERA? Does this materially change HERA?
And Finally, lets look at the Litigation Authority as spelled out in HERA. In HERA it says:
“In enforcing any provision of this title, any regulation or order prescribed under this title, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director’s own name and through the Director’s own attorneys.
SUBJECT TO SUIT.—Except as otherwise provided by law, the Director SHALL BE SUBJECT TO SUIT (other than suits on claims for money damages) by a regulated entity with respect to any matter under this title or any other applicable provision of law, rule, order, or regulation under this title, in the United States district court for the judicial district in which the regulated entity has its principal place of business, or in the United States District Court for the District of Columbia, and the Director may be served with process in the manner prescribed by the Federal Rules of Civil Procedure.’’
1. Did Judge Lamberth actually read the HERA when he declared the actions of the Director were not subject to judicial review? Did he misread the section titled:
“Limitation on judicial review” which states: “Except as otherwise provided in this subsection, no court shall have jurisdiction over—
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets or charter of any regulated entity for which the Agency has been appointed receiver; or
(ii) any claim relating to any act or omission of such regulated entity or the Agency as receiver.
Did Judge Lamberth miss the point that this limitation deals with receiverships only? Does he know that no receivership has been declared? Is his dismissal based on something he misread? Does his misreading materially change the intent and scope of HERA?
So…whose job is it anyway to determine if governmental agencies are in compliance with following the intent, scope and implementation of laws enacted by congress?
When Congress passes an Act into law, then gives it to a governmental agency to carry out, oversight of the agency is provided for within the Act. Each Act contains within it directives to establish oversight boards to monitor the execution of the Act. It is no different in HERA.
As I have written before, HERA modifies and changes the The Federal Housing Enterprises Financial Safety & Soundness Act of 1992. When it comes to HERA, a provision within HERA is set up to modify the Act or 1992 to establish the Federal Housing Finance Oversight Board by adding Section 1313A to the Act of 1992. The OVERSIGHT BOARD was to have 4 members, the Secretary of the Treasury, the Secretary of Housing and Urban Development, the Chairman of the Securities and Exchange Commission, and one member who shall serve as the Chairperson of the Board. The Board was to meet at least once every 3 months. The Board was restricted to not exercise any executive authority. The Board was to ADVISE the Director of the FHFA with respect of overall strategies and policies in carrying out the duties of the Director under HERA. On an annual basis, the Board was to testify before Congress regarding
1. the safety & soundness of the regulated entities;
2. any material deficiencies in the conduct of the operations of the regulated entities;
3. the overall operational status of the regulated entities;
4. an evaluation of the performance of the regulated entities in carrying out their respective missions;
5. operations, resources, & performance of the Agency;
6. such other matters relating to the Agency & its fulfillment of its mission, as the Board determines appropriate.
So there you have it, the “Checks and Balances” on which our government is based. Do I think HERA is well written? No, I don’t. Do I think HERA was initially established to improve supervision and regulation of the GSE’s to increase public confidence in them? Yes, it is actually written in the Act! Do I think Congress knew at the time the Act was passed that it would be used to put the GSE’s in conservatorship to backstop the “too big to fail banks”? Yes, without a doubt, otherwise, the Secretary of the Treasury would not have told the Director of the FHFA to put the GSE’s in conservatorship and then have them purchase $40 billion dollars worth of underperforming mortgages each month. Do I think the Obama Administration twisted the facts to imply the GSE’s were at fault for not being able to pay their debts? Absolutely! Is there a “feel good” ending to take away from this search? Sorry, you won’t find it here!
So where does that lead me? Good question. In my former life, I was an Architect. I’ve since retired. My retirement investments include a substantial stake in FnF commons. I’ve owned it for a number of years based on the knowledge I gained of the GSE’s from a real estate investment class in graduate school. The architect in me wants to see housing finance in the US put right, for the common good, but how to do it?
Usually a problem occurs when there is too much concentration of certain things in a given location. In the case of housing these concentrations were housing booms in various locations in the US. Las Vegas exploded with new housing in the 1990’s and 2000’s, as did Phoenix, and Los Angeles, and Florida, etc. etc. It started innocently enough, but it quickly became distorted. At the start of the housing boom, there was so much profit in every facet of it from land development, to design, to construction, to finance, to suppliers, to political gain that everyone involved wanted to see the boom continue even after it showed signs of peaking. So, the people with the most to gain developed artificial methods to keep it going. This included such things as shoddy construction to reduce costs and maximize profits, to “rah rah” real estate brokers who hyped up would be home buyers, to predatory loans with adjustable rate mortgages, overrating mortgage loans, to greedy buyers who would refinance their mortgage annually, to selling the poorly performing mortgages to FnF. etc. etc. It was quite profitable. It was unsustainable. It was all done by US taxpayers. So now we have problems concentrated into given areas. The banks in Las Vegas, in Phoenix, in Florida, etc. had too many poorly performing mortgages on their books and were about to collapse. To keep this from happening, the government had the GSE’s purchase those poorly performing mortgages from the banks, giving the banks a chance to recapitalize. Now, those poorly performing mortgages are concentrated in the GSE’s and it is threatening to cause them to fail.
I have a professor friend who told me once, “the solution to pollution is dilution”! I can’t remember the context in which he told me, but it always seems to apply to most dire situations. In this case, to save the banks in Las Vegas and elsewhere, they had too many bad loans concentrated on their books, so they “diluted” those concentrations by selling them to the GSE’s. The government created an artificial demand for those poorly performing mortgages by directing the GSE’s to purchase $40 billion worth of them every month. Unfortunately, this just moved the concentration to Washington DC., and now those concentrations threaten to take down the GSE’s.
The answer, “the solution to pollution is dilution”. We must first allow the GSE’s to reduce their concentration of bad mortgages by the common means of refinancing where possible, by foreclosure if necessary, by selling on the public market foreclosed homes, and directing “buy backs” to the banks. This can be done by giving the GSE’s sufficient time to do it. In the process, reign in the GSE’s and limit their portfolios to a reasonable percentage of the secondary mortgage market. Require that they have reserves sufficient to cover their portfolios. Do Not allow them to concentrate all of the nations mortgages in one place. Concentration becomes pollution. Next, by restricting the volume of mortgages held by the GSE’s, the banks will be required to work within the liquidity limitations of their own areas. If you only have so much money to lend, then you can’t make an excessive amount of mortgages. It will be painful a first, but it will work. Next, regulate the private sector of the secondary mortgage market to assure they have reserves sufficient to cover their portfolios. Do not allow them to concentrate more loans that they can cover. These are only a few ideas, but it should be a good foundation on which to rebuild housing in the US.
PROFOUND DISCOVERY
I found something pretty key today while creating the timeline for the GSE conservatorship:
8.17.12 Treasury Dept. Announces Further Steps to Expedite Wind Down of GSE’s Full Income Sweep of ALL FUTURE EARNINGS of GSE’s announcement http://www.treasury.gov/press-center/press-releases/Pages/tg1684.aspx
“Acting upon the commitment made in the Administration’s 2011 White Paper (published Feb 2011) that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market in their prior form.”

How can the Treasury do this? [b]In HERA under Subtitle C, Item ‘‘(7) FHFA is NOT SUBJECT TO ANY OTHER FEDERAL AGENCY.—When acting as conservator or receiver, the FHFA shall not be subject to the direction or supervision of any other agency of the United States or any State in the exercise of the rights, powers, and privileges of the FHFA.
Why is the Treasury even involved. This is questionable!

Obama Administration White Papers: http://www.treasury.gov/press-center/press-releases/Pages/tg1059.aspx
The sweep is based on the White Papers which were presented to Congress but never adopted! The White Papers were just a plan, nothing more. They were not the housing finance reform legislation some wanted, it was just a possible plan. The Treasury acted upon it as though it was law! There was NO LAW! The White Papers have no congressional authority, They have no basis for action, they have no law upon which to build, they have no stated agency to carry out the plan, and they have no oversight committee to assure compliance with the stated objectives! This is the smoking gun! The Administration did not have Housing Reform Legislation to act on, so they used the plan they had and instituted their own Housing Reform. This is questionable. Anonymous said: October 20, 2014 at 7:53 pm Lamberth said HERA would allow sweep, no congressional action needed. Lamberth would be wrong. There is no such allowance in HERA. Matter of fact the Sweep Amendment didn’t even come from HERA, It came from the Obama Administration White Papers Feb 2011, and the implementation of those papers as though they were law. Congress never ever gave approval for the plan contained within the White Papers. The plan was just that, a plan like many other plans being considered at the time. The White Papers lay out a plan for Housing Finance Reform”. Congress never voted on it, public comment was never considered, compliance with HERA was never incorporated, it never became law, it never received the approval of the House or the Senate. It never creates a committee to oversee the proper implementation of the ideas within. None of that was included. But still Obama dictated that FHFA incorporate the contents into the conservatorship of the GSE’s.
So, on Feb 21, 2012 the FHFA published the publication “A Strategic Plan for Enterprise Conservatorships: The Next Chapter in a Story that Needs an Ending” See: http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/20120221_StrategicPlanConservatorships_508.pdf

Inside this document on page 2, the FHFA adds “winding up the affairs” to the definition of the conservatorship set in HERA. This changes HERA significantly. It is also in conflict with the US CODE. Also, within the document, it sets the goal to “build a new secondary mortgage market infrastructure”. AGAIN…this is not anywhere contained in HERA. On page 6 of the Strategic Plan, it declares “As with any strategic plan, this document is not a step-by-step guide. Rather, it sets forth certain broad objectives that are consistent with FHFA’s legal mandate and the policy direction that has emerged from the Administration and Congress. Importantly, this plan is consistent with each of the housing finance reform frameworks set forth in the white paper produced last year by Treasury and the U.S. Department of Housing and Urban Development (HUD) and with the leading congressional proposals introduced to-date”.
Again, the White Paper from the Obama Administration and the White Paper from the Sec. of Treasury and Sec. of HUD were never made into law. They were just plans never approved by Congress, never made into law, and in stark contrast to the law that was supposed to be followed “HERA”.
The White Papers call for the Phasing in of a 10% down payment for a mortgage, but today just two weeks for the election, the FHFA is negotiating to have down payments as low as 3% !!

ANOTHER SMOKING GUN

Tues 10/21 Another Smoking Gun Blockbuster today. I have proof that the GSE’s were already very profitable when the Treasury directed the Sweep Amendment, contrary to what the Treasury claimed. It is all in Fannie Mae's Quarterly Reports here:
http://www.fanniemae.com/portal/progress/quarterly-performance.html
In fact, the GSE’s had already returned $23 billion to the Treasury from their Q1 and Q2 earnings!!! The Treasury claimed the GSE’s were insolvent which they were not. The GSE’s were being wound down, so the Obama Administration could “Build a new secondary mortgage market infrastructure.”
Full definition of White Papers: white papers: a government or other authoritative report giving information or proposals on an issue.
White paper – Wikipedia, the free encyclopedia: A white paper is an authoritative report or guide helping readers understand an issue, solve a problem, or make a decision

October 21, 2014 at 7:21 pm
Great News EVERYBODY! I think I just found a document identified as Strategic Plan for the Conservatorship of the GSE’s dated May 13, 2014. I’ve just started to read and study, and it seems to modify most of the decisions precipitated by the White Papers of Feb 2011. It brings almost every aspect of what has be discussed above into compliance with HERA, even the continuance of the GSE’s but maybe with a different name. The GSE’s are not going away! Ill let you know as soon as possible.
INCREDIBLE RELIEF AND FANTASTIC FIND
Well, well, well. There has been a major attitude adjustment going on at the FHFA. Someone or some entity has directed the FHFA to get out of the business of formulating policy for housing reform and contain their efforts to the statutes prescribed by HERA. It is a beautiful thing. Here is the mumbo jumbo stripped version of the important to us sections of the Strategic Plan for the GSE’s in Conservatorship May 13, 2014. The sections after the below deal with the day to day supervision and specific tasks and compliances to be met. Here is the heart of what matters to us. You can see the full document here: http://www.fhfa.gov/aboutus/reports/reportdocuments/2014strategicplan05132014final.pdf
Here is the heart of it:
ABOUT THE FHFA AND THE CONSERVATORSHIPS OF FANNIE AND FREDDIE
The (FHFA) was established by HERA and is responsible for the effective supervision, regulation, and housing mission oversight of the GSE’s. The agency’s mission is to ensure that the GSE’s operate in a safe and sound manner so that they serve as a reliable source of liquidity and funding for housing finance and community investment.
As part of HERA, Congress granted the Director of FHFA the discretionary authority to appoint FHFA as conservator or receiver GSE’s. On Sept 6, 2008, FHFA placed GSE’s into conservatorships. Since then GSE’s have received $187.5 billion in taxpayer support under the Senior Preferred Stock Purchase Agreements (PSPA) executed with the U.S. Treasury. FHFA continues to oversee these conservatorships. FHFA’s authority as both conservator and regulator of the GSEs is based upon statutory mandates enacted by Congress, which include the following conservatorship authorities granted by HERA: take such action as may be–
(i) necessary to put the GSE in a sound and solvent condition; and
(ii) appropriate to carry on the business of the GSE and preserve and conserve the assets and property of the regulated entity.”
Carrying on the business of the GSEs in conservatorships incorporates the following regulatory responsibilities also given to FHFA in HERA:
“(B) to ensure that–
(i) each GSE operates in a safe and sound manner, including maintenance of adequate capital and internal controls;
(ii) the operations and activities of each GSE foster liquid, efficient, competitive, and resilient national housing finance markets (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities);
(iii) each GSE complies with this chapter and the rules, regulations, guidelines, and orders issued under this chapter and the authorizing statutes;
(iv) each GSE carries out its statutory mission only through activities that are authorized under and consistent with this chapter and the authorizing statutes; and
(v) the activities of each GSE and the manner in which such GSE is operated are consistent with the public interest.”
Additionally, under the Emergency Economic Stabilization Act of 2008 (EESA), FHFA has a statutory responsibility to “implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage the servicers of the underlying mortgages, and considering net present value to the taxpayer, to take advantage of…available programs to minimize foreclosures.”
FHFA, acting as conservator and regulator, must follow the mandates assigned to it by statute and the missions assigned to the GSEs by their charters until such time as Congress revises those mandates and missions.
FHFA’S STRATEGIC GOALS IN CONTEXT.
The 2014 Strategic Plan provides an updated vision for FHFA’s implementation of its obligations as conservator of the GSE’s. FHFA has issued two prior documents detailing the agency’s approach to the conservatorships of Fannie Mae and Freddie Mac. On February 2, 2010, FHFA sent a letter to Congress outlining the agency’s understanding of its conservatorship obligations and how it planned to fulfill those obligations. On February 21, 2012, FHFA sent Congress a “Strategic Plan for Enterprise Conservatorships: The Next Chapter in a Story that Needs an Ending” that set three strategic goals for conservatorship and elaborated on how FHFA planned to meet its conservatorship obligations.
Since January 6, 2014, FHFA has conducted an ongoing assessment of its obligations and statutory mandates in an effort to update the Strategic Plan released in 2012. FHFA’s 2014 Strategic Plan reflects this assessment and, as a result, three reformulated strategic goals are set forth here:
1. MAINTAIN, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets.
2. REDUCE taxpayer risk through increasing the role of private capital in the mortgage market.
3. BUILD a new single-family securitization infrastructure for use by the GSE’s and adaptable for use by other participants in the secondary market in the future.
These reformulated strategic goals take into account 2 major factors. First, both the February 2, 2010 letter to Congress and the February 21, 2012 Strategic Plan heavily reflected that the GSEs were generating losses with a highly uncertain outlook for future losses and that actions were necessary to stabilize the Enterprises. Second, FHFA’s statutory responsibilities as conservator do not involve making policy decisions on the future of housing finance reform. That future will be decided by Congress. Consequently, FHFA’s 2014 Strategic Plan adheres to its existing statutory mandate of overseeing the conservatorships of the GSEs in their current state and ensuring that the Enterprises’ infrastructure meets the needs of their current credit guarantee businesses and other operations.
The following sections of 2014 Strategic Plan provide an overview for each of the agency’s strategic goals for the conservatorships. Each section discusses how FHFA’s work since 2012 has established a foundation that continues to support the agency’s agenda. That foundation includes important efforts related to improvements to the Representation and Warranty Framework, foreclosure prevention efforts, structures for sharing risk with the private sector, the development of the Common Securitization Platform, and data standards. Further, each section includes additional steps that FHFA believes are necessary and prudent in light of changes that have occurred since GSE’s were placed into conservatorships.
So what is the takeaway here…..The GSE’s are going to be around for a long time. They will have some changes to the way they do business and there will be increased supervision and the securitization platforms will evolve, but they will NOT be closed. They will NOT be wound down. Release from conservatorship should not be long.
Now, it looks like the end to the Sweep Amendment will just be a formality. If you don’t want to be left behind, it may be time to accumulate.
The Sweep Amendment, the wind down, the denial of profits to shareholders are battles that have already been won. Those battles were won back in May 2014 when the Strategic Plan for the Conservatorship of the GSE’s was published. Someone or some entity with some serious stroke stepped in and mandated compliance with HERA or else! At some point in the future there may be housing reform, but not for a while.
The Treasury and FHFA are being directed to play by the rules of HERA as proven by the contents of the Strategic Plan 5/13/2014. The Rule of Law has been enforced and is being monitored in a big way! Failure to comply could be an impeachable offense! Not good for the Obama legacy.
In the Strategic Plan 5/13/2014, the most telling sentence is this one:
“Second, FHFA’s statutory responsibilities as conservator do not involve making policy decisions on the future of housing finance reform. That future will be decided by Congress. Consequently, FHFA’s 2014 Strategic Plan adheres to its existing statutory mandate of overseeing the conservatorships of the GSEs in their current state and ensuring that the Enterprises’ infrastructure meets the needs of their current credit guarantee businesses and other operations. “
Gone are the White Papers!
Is anybody reading this????
Expect a conciliatory ending to the Sweep Amendment soon.
Oh NO! I’ve put them all to sleep! Damn!
Clarification of the term “RESTITUTION”
QUOTE: Victim Restitution for Financial and Emotional Suffering from Fraud
The principle of restitution is an integral part of virtually every formal system of criminal justice. It holds that, whatever else society does to punish its wrongdoers, it should also insure that the criminal is required, if possible, to restore the victim to his or her prior state of well-being.
The payment of restitution by perpetrators can mark the end of a financial nightmare for fraud victims. It not only serves to right a wrong, it often allows them to return to whatever level of financial security they enjoyed before the crime. The biggest dream for those who have suffered from financial crime is getting some money back, preferably from the people who stole it from them. UNQUOTE
http://www.crimes-of-persuasion.com/Victims/restitution.htm
October 25, 2014 at 11:37 pm
From http://www.crimes-of-persuasion.com/Victims/restitution.htm

END OF PART 1[/b]


Last edited by thombiz on Sat Nov 01, 2014 1:49 pm; edited 4 times in total
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mac



Joined: 07 Mar 1999
Posts: 5471

PostPosted: Thu Oct 30, 2014 7:47 pm    Post subject: Reply with quote

And this recounts the scandal that I remember:

Quote:
The SEC filed a civil fraud lawsuit Friday against six former top executives at Fannie Mae and Freddie Mac, saying they misled investors about the subprime-loan risks they faced.
By Mark Trumbull, Staff writer DECEMBER 16, 2011
Susan Walsh/AP/FileView Caption
Six former top executives at the housing giants Fannie Mae and Freddie Mac misled investors about the subprime-loan risks they faced, the Securities and Exchange Commission alleged in a civil fraud lawsuit Friday.

Those charged include the men who were chief executives of these government-chartered mortgage enterprises. Daniel Mudd headed Fannie Mae and Richard Syron led Freddie Mac as the housing boom ended and the financial crisis began.

The lawsuit is significant because some finance experts have sharply criticized the federal government for failing to prosecute more executives who may have contributed to the financial meltdown, and because the future of Fannie and Freddie is now a matter of hot political debate.

Recommended: Home sales down. But six cities defy housing gloom.
"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, SEC's enforcement director, in filing the suit in New York. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk."
http://www.csmonitor.com/USA/Justice/2011/1216/Subprime-scandal-ex-Fannie-Mae-Freddie-Mac-execs-accused-of-fraud
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thombiz



Joined: 25 Jun 2007
Posts: 618
Location: Corpus Christi

PostPosted: Thu Oct 30, 2014 7:49 pm    Post subject: Reply with quote

Part 2:
http://www.crimes-of-persuasion.com/Victims/restitution.htm
October 25, 2014 at 11:37 pm
From http://www.crimes-of-persuasion.com/Victims/restitution.htm
QUOTE
Court-Ordered Restitution.
U.S. courts must order restitution for federal fraud crimes committed after April 24, 1996, regardless of the defendant’s ability to pay. The court sets the amount of restitution, the order in which victims will be paid (if there are multiple victims, usually those with the most pressing financial needs are paid first), and conditions for repayment. Even the process of having to notify all the victims in a big fraud case is an overwhelming undertaking.
UNQUOTE

ANOTHER TRUTH
I woke up this morning Oct 30, at 5:00 AM. A sadness came over me as I realized another truth. Because of the brazen arrogant activist politics of a few, a fraud has been visited upon our nation. It is a fraud that cannot and will not be allowed to stand. That is one of the basic premises of the legal foundations established for the orderly conduct of affairs in our country. It must be corrected by the “rule of law”. Correcting it is not going to be inexpensive. It is going to take billions and billions of dollars to set things right. The very people we elected to be the most trusted stewards of our nation have failed us. They stood by and let the White Papers be implemented and never saw it when it was right in front of them. They never even raised an eyebrow! Politics as usual. Senators and Representatives you have a job to do. Get off your ass and do it. Get involved. Pay attention.
The saddest part…..who do you think picks up the tab for their arrogance and deceit? The taxpayers! Not Fannie and Freddie. Not the Obama Administration. Not the judiciary. The taxpayers. Not the senators and representatives who had their heads buried in the sand. The taxpayers.
The only ones to benefit are the wolves on wallstreet. At least they are doing their job. I am talking about billions of tax dollars that could have been used to do real and honest good.

Bob Thompson
OCT 30, 2014
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