Comment Detail

Comment

11/02/2021

Honorable Sandra L. Thompson
FHFA Director

Dear Madam Director,

The regulator overseeing Fannie Mae and Freddie Mac proposed changes to recently imposed capital and leverage requirements: The proposed rule would encourage shifting risk from taxpayers to private investors. I am not sure if the Director is fully aware of the history of the companies; The taxpayers were under no obligation to take on this risk: The taxpayers took on this risk when the two companies were put into conservatorship. Shifting risk from the taxpayers the United States Treasury will have to return the companies back to the private shareholders.

In summary, the entire Conservatorship, the notion of GSE instability, and a failed model appears to have been fabricated by the US Treasury. HERA was passed by a congress during a moment of weakness and panic without any or all the the congressmen and congresswomen understanding the details (fine fine print) and how these could be manipulated, As we have seen Fannie Mae was able to pay back the entire amount of funding from the US Treasury because it never burned or needed the cash in the first place... as proven, strangely enough, via the Company's own disclosures.

Government Sponsored Enterprise (GSE) is some what of a misconception when relating to Fannie Mae and Freddie Mac also known as GSE's. Originally, Fannie Mae had a explicit guarantee from the United States government; if the entity got into financial trouble the government promised to bail it out. This changed in 1968. Fannie Mae became a private stockholder owned company. Fannie Mae securities received no actual explicit or implicit government guarantee. This is clearly stated in the securities themselves, and in many public communications issued by Fannie Mae.

Quote: “Although we are a corporation chartered by the U.S. Congress, the U.S. Government does not guarantee, directly or indirectly, our securities or other obligations. We are a stockholder-owned corporation, and our business is self-sustaining and funded exclusively with private capital. Our common stock is listed on the New York Stock Exchange, and traded under the symbol “FNM.” Our debt securities are actively traded in the over-the-counter market.” End of Quote.

Above Information from: Fannie Mae form 10K Dec 31, 2007
part I, page 1, item 1.
Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2007/form10k_022708.pdf

Fannie and Freddie had $95 Billion when the FHFA took control;

Quote “The Enterprises’ $95 billion in total capital, their substantial cash and liquidity portfolios, and their experienced management serve as strong supports for the Enterprises’ continued operations.” End of Quote James Lockhart Director

Paulson coached Lockhart into taking over the Enterprises ! The two companies never needed a so called bailout.

https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-OFHEO-Director-James-B-Lockhart-in-Support-of-Secretary-Paulson,-Administration-and-the-Federal-Reserve-in-T.aspx

When Fannie Mae was taken over the company was adequately capitalized.

Fannie Mae: page 78 of June 30, 2008 10Q. A relative tiny amount of 192 million dollar of unpaid mortgage interest on what is a trillion dollar portfolio how that could lead to a Taxpayer shell out a 100 billion dollars plus ?

Facts: Page 7 “Our core capital as of June 30, 2008 was $47.0 billion, $14.3 billion above our statutory minimum capital requirement and $9.4 billion above our regulator-directed 15% surplus requirement.”

Link: https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2008/q22008.pdf

Treasury, however, lacked authority to put the two companies into conservatorship; only the new regulator, FHFA, could do that. And Treasury had kept neither the old OFHEO nor the new FHFA apprised of its nationalization intentions. Paulson was unaware that on August 22 FHFA had sent both Fannie Mae and Freddie Mac letters saying the companies were safe and sound and exceeded their regulatory capital requirements. Paulson told Lockhart that he had to change his agency’s posture on the two companies, and FHFA did exactly that. On September 4, FHFA sent each company an extremely harsh mid-year review letter, and two days later, Paulson, Lockhart and Fed chairman Bernanke met with the companies’ CEOs and directors to tell them they had no choice but to agree to conservatorship.

When Paulson met with the directors of Fannie Mae and Freddie Mac to inform them of his intent to take over their companies, neither entity met any of the twelve conditions for conservatorship spelled out in the newly passed HERA legislation. Paulson since has admitted he took the companies over by threat. This fact has been stated in the Washington Federal Lawsuit filed against the government.
Page 30-31 Twelve Conditions

Link: https://docs.google.com/file/d/0BxUYhg0cYUOTbkZYVVJkaGtoS1E/edit?resourcekey=0-gU6I5hW3ndG5E3uY2VEyGA

I am not sure why when links to information are posted to the FHFA site the links given do not work for the public reading the information. The readers do not have access to the information. Please make links available.

Thank you,

Rodney T Fernandez
3730 Main St.
Moss Point, MS 39563

Shareholder Fannie Mae, Freddie Mac