Comment Detail

Comment

I encourage FHFA to allow Director Mel Watt to exercise his statutory authority under the HERA Act of 2008 and end the GSEs’ woefully inadequate capital reserves by ending the Net Worth Sweep. As instructed under HERA, FHFA has guided the Enterprises back to a safe and solvent condition, accounting for future market liquidity and stability. A continued conservatorship and ongoing quarterly dividend payments will leave the Enterprises at danger’s doorstep in two short months, come January 1, 2018, when each entity is operating on zero capital.

The government has been paid back and there is no logical reason to continue the Net Worth Sweep, a practice that is counter to the interests of taxpayers and shareholders – a concern that has been echoed by Members of Congress, Director Mel Watt and Treasury Secretary Steven Mnuchin. As conservator, it is the Agency’s rightful duty to protect taxpayers from another bailout and to uphold the rule of law.

After nine long years of the GSEs in conservatorship, returning the entities back to their rightful owners – the shareholders -- will be welcome, long awaited news for so many Americans who have been invested for years, expecting the government to hold up its end of the bargain and pay them back what they are rightfully and contractually owed. Shareholders and private capital are both critical in the long term health and success of the housing sector. The rippling effects of private capital loss to the market would be enormous. Not to mention, ignoring loyal, hardworking Americans and denying them of their assets is a direct conflict of shareholder rights, exemplifies an egregious practice of government overreach and too generous an exertion of government privilege. Within the next four years, FHFA must work with urgency to end the quarterly dividend payment, protecting taxpayers and lifting any future burden off their shoulders.