Comment Detail

Comment

Dear Director Calabria

I have been a stakeholder in Freddie Mac since 2007 when I purchased shares of common and junior preferred shares of Freddie Mac. I also was an indirect owner of Freddie Mac as an investor in The Growth Fund of America which was the sole holding of my children's 529 College Investment Fund.

I purchased the shares of Freddie Mac and was happy to have my children's 529 Plan invested in Freddie Mac because I believe in the societal benefits of public/private partnerships in general and specifically in the goals and mission of Freddie Mac since I strongly believe that the US housing finance system is the bedrock for providing housing security to American Families.

I maintained and increased my investments in Freddie Mac and indirectly in my children's 529 plan in 2008 because I believed the US Government officials who made public statements encouraging shareholders to continue to invest in Freddie Mac. I have attached the Ralph Nader Letter to US Treasury Secretary Lew where he cites several of these US Government Officials statements and makes the point that prudent investors were given assurance that there continued investment was reasonable. In addition to widely held mutual funds like The Growth Fund of America, there were multiple insurance companies and depository institutions who remained faithful investors in the very important mission of the public/private partnership of Freddie Mac and also Fannie Mae.

Once Freddie Mac was placed into Conservatorship, I maintained my investment in Freddie Mac and The Growth Fund of America because I expected the net income of Freddie Mac to offset realized portfolio losses and because I expected a fair and equitable treatment by the FHFA as Conservator based off the precedent of conservatorship resolution standards for depository institutions and the common law principles of conservatorship. Many of us have had family members who may have required a conservatorship to be instituted and we understand the high standards of fairness that come with the fiduciary duty of a conservatorship. These standards and the paramount importance of the fair treatment of all stakeholders in a conservatorship is adeptly presented in the Cato Institute Working Paper - " The Conservatorship of Fannie Mae and Freddie Mac" as attached. I should also not that the net income of Freddie Mac did in fact offset all portfolio losses as realized through the Great Financial Crisis and of course made tremendous returns for the last 8 years.

I have provided the background of my role as a stakeholder in Freddie Mac to urge the FHFA to act expeditiously in coming to a fair resolution of the interest in shareholders of Freddie Mac and Fannie Mae. The FHFA can not and should not expect that the massive amount of capital needed to meet the final requirements of the Proposed Capital Rule unless shareholders are economically compensated for the unlawful expropriation of profits that came with the unjustified implementation of the Net Worth Sweep. Payment should be made for lost dividends of common and preferred shareholders over the 8 year period since the Net Worth Sweep.

If existing shareholders are not treated fairly, future shareholders will not invest in the awesome mission of Freddie Mac and Fannie Mae. The precedent will be that the public side of the public/private partnerships will be wiped out by back door nationalizations opportunistically executed by unscrupulous regulators egged on by politicians with opportunistic agendas or socialist philosophies.

Now more than ever do we need the sanctity of contracts and fair dealing for the capital markets to support public/private partnerships in general and Freddie Mac and Fannie Mae specifically. The release and recapitalization of Freddie Mac and Fannie Mae is likely just the beginning of massive offerings of multiple public/private partnerships of a monumental infrastructure investment program in the next few years. We all need to work together to invest in our infrastructure to promote the economic growth that will help our economy rebound from the economic devastation caused by the current pandemic. As investors it is our role to invest in public/private partnerships we believe in and where we can garner reasonable returns. As a regulator it is the role of the FHFA to rectify the sins of the past and give us a reasonable basis to keep the faith in fairness . The American housing system and capital markets depend on this standard of fairness.

Thank you very much for the opportunity to submit these comments.