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Comment

Dear Honorable Watt;

Let me thank you for your all your support, patience and hard work you have put into your job as Director of FHFA and conservator of Fannie Mae and Freddie Mac. You undertook a complex task facing both strong opponents and supporters and have done well. But now that Fannie Mae and Freddie Mac have been in conservatorship for nine years and they have become highly profitable companies, it is time to take a different path going forward and make housing finance great again by taking them out of conservatorship. Although potentially plans may have been put forth to accomplish this, likely they were politically un-attainable or biased toward one party at the detriment of another, and so no plan has been accepted.

I have read the plan provided to you and the President of the United States (copied below), now widely called The Average Joe Plan, to bring Fannie Mae and Freddie Mac out of conservatorship. This plan is not written by a hedge fund, and offers:

• a simple solution for FHFA to bring Fannie Mae and Freddie Mac out of conservatorship;
• prosperity for present and future home buyers who qualify for reasonable loans as it restores confidence in housing finance for all Americans again;
• the government, in a bi-partisan approach to end the conservatorship and potentially unlocks up to one trillion in revenue - the beauty of this is it costs the government nothing;
• tax payers, as it ends government funds sent to Fannie Mae and Freddie Mac; and
• pension funds like those owned by school teachers and firemen for example and preferred and common stock owners as it brings their investment ownership to full value.

In other words, this plan is beneficial to all Americans of yesterday, today and of course the children, our future tomorrow.

Regards.

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Make Fannie Mae and Freddie Mac Great Again Plan
(An Average Joe’s Idea to Get Fannie Mae and Freddie Mac Out of Conservatorship)

Dear Honorable Mr. Watt,

It’s now been over 9 years since the beginning of the Conservatorship of Fannie and Freddie. The companies have been through a massive transformation internally into much much safer and more efficient shareholder owned companies than they ever have been. As you know, Fannie and Freddie are the most important and most profitable companies in the world. These companies have saved our financial system, and even provided assistance for affordable healthcare. These companies are fortunate that they have had the power and resources to help so many families afford a home, and even afford healthcare. As a shareholder of the common equity of these systemically important institutions; I understood that according to the law set forth in 2008, that there was sacrifice involved with investing in these companies, but the investment was worth the time and sacrifice. I must humbly say that I am disappointed the Conservatorship went on for so long, especially without some consideration to share the success with individual, normal, hard-working shareholders. I feel there is a very simple solution can be executed by you with help from the Treasury Secretary Mnuchin, and the president to ensure Fannie and Freddie are sound and solvent. The solution would be a huge win for the government, all classes of shareholders, the employees, and other stakeholders.

The plan includes the following:

1. Immediate relinquishment of the so called 3rd Amendment of the PSPA known as the Net Worth Sweep.

2. Deem the Senior Preferred fully paid and cancel the shares

3. Deem the warrants for approximately 80% of the companies Null and Void

4. Order Fannie Mae and Freddie Mac to issue to the Treasury 500 Million to 1 Billion Common Stock Equity Options with a strike price of $60 a share. This exercise price is chosen because the companies boards have the power to deem the share price whatever stock price value they want. Also, because $60 would make all employee retirement savings whole. So many employees lost their savings from the 2008 crisis. Many of them trusted Fannie and Freddie not to fail.

5. Issue Fannie Mae and Freddie Mac a capital buffer equivalent to $30 to $60 B representative of the exercisable $60 option strike price proceeds that would go to the companies upon execution of the option(s). This equivalent buffer could be reduced as the government executes its options. This plan gives not only the shareholders vested interest in the value of the companies, but also the government. All stakeholders will have an interest for the companies to command great equity value. For example, if the share price goes to about $1000 a share (before forward stock splits), the government could make over a Trillion dollars in combined proceeds from exercised options and from taxable capital gains.

The plan will stop all lawsuits. Junior preferred and common equity holders will drop lawsuits because all stakeholders will be made whole; and will flourish.

May God Bless America