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  • Comment Detail

  • Date: 08/30/20
    First Name: H
    Last Name: Pate
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA95

  • Comment

    The Honorable FHFA Director: Dr. Mark Calabria,

    I want to thank you for your service and dedication towards following the rule of law as Regulator and Conservator of Fannie Mae and Freddie Mac. I am sure you are facing pressure from Congress and lobbyists that have their own agendas in keeping Fannie and Freddie under conservatorship. It is your statutory duty as Conservator to rehabilitate the GSE's and release them, and it appears you are doing your job, unlike your predecessors. You helped to write the law on HERA and your knowledge on this matter is unparalleled.

    I speak from a stakeholder point of view who has held an equity interest in the GSE's for more than a decade. Shareholders have not received a single penny in dividends despite Treasury receiving hundreds of billions, when those monies should have been retained by the GSE's to fulfill their duty to provide homeowners an easy and affordable method for financing a home. The consevatorship was illicitly implemented and poorly managed until your leadership.

    I leave the capital rule making to you and your staff who are surely quite capable of data driven modeling. My input on the matter would be to not make the capital requirements too onerous so as to not fulfill the mission of the Federally chartered enterprises. There was an implicit backstop because housing finance is of a national concern. That backstop turned explicit upon the agreement of the Senior Preferred Stock Purchase Agreements. The onerous terms if ever required again should be at reasonable prevailing market interest rate, not 10% in perpetuity + 79.9% equity stake and a PCF. The capital requirement could be structured so that it is floating and dependent upon numerous macro-related variables.

    Whatever final capital requirement is made, investors should not have to put up new capital to recap. The Treasury should retire the Senior preferred stock, warrants and any reimburse Fannie and Freddie for nefarious gains. Shareholders both preferred and common classes have been mistreated for a long time and they should be made whole through instant recap.

    It is refreshing to see an independent World-Class Regulator at the helm of FHFA.

    Thank you Sir.