Skip to main content

  • Comment Detail

  • Date: 10/17/14
    First Name: Ronald
    Last Name: Dupard
    Organization: DuVestCo, Inc.
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA65

  • Comment

    As a FMCC shareholder, and as a real estate broker of almost 40 years, I believe that the FHFA should set goals of 1) Relisting the FMMC and FNMA stock; 2) Removing both entities from conservatorship; and 3) Shelving any proposals to wind down the GSEs ASAP. My view of the housing crises and resulting GSE financial problems is that the GSE's problems were not as much a result of GSE practices as they were the result of the repeal of the Glass-Steagall Act, i.e., deregulation, which resulted in a wide variety of ill conceived new lending products and fraudulent activity by mortgage lenders, their underwriters, investment bankers, and rating agencies, all of whom worked together to dupe the GSEs into buying substandard loans. This must be the case given the record amount of cash settlements between the aforementioned and the FHFA. Accordingly, if the GSEs were not at the root of the problem, why should they be wound down and why should American homebuyers and GSE shareholders be punished?

    Some people believe that FMCC and FNMA represent too great of a systemic risk to be allowed to survive. Such fears are unfounded, as the GSE system has roots going back to the housing collapse during the Great Depression, and the system seems to have worked well for more than 50 years before the repeal of Glass-Steagall led to the crack binge of bad lending practices that ultimately sank the mortgage market and caused the housing collapse. Winding down the GSEs without damaging the housing market is a pipe dream since the GSEs probably represent 80% or more of the secondary market, and there wouldn't be enough private entities to fill the void left by their demise, which would be sure to drive up lending costs thereby reducing housing affordability. Furthermore--and most important--one of the reasons that the GSEs have been so successful in being able to attract the vast amounts of capital necessary to conduct their operations is because of the explicit backing of the full faith and credit of the US Government. Huge funds all around the world that buy the GSE's paper are required by their investment criteria to only buy US Government guaranteed paper, which means that most such investors couldn't buy private agency debt even if they wanted to, which means that private agencies couldn't raise the capital necessary to efficiently run the nation's secondary mortgage market.

    The FHFA should set goals to honor the terms of the FNMA and FMCC conservatorship and restore them to profitability because winding them down will damage shareholders, investors, homeowners, and the American economy.