Paulson's remarks are good for the two GSEs. Why? Because, with remarks of the former Treasury secretary who helped place the GSEs under "Conservatorship", the issue is now more exposed to the public for an open debate. Nobody denies the share of responsibility of the GSEs in the housing bubble that caused the recent recession and nobody denies the GSEs need "overhaul", reforming, etc. But, what about the banks? Did they behave any better in the whole financial crisis? If they had been clean and had not passed on bad mortgage loans to GSEs, they would not have needed to pay huge amounts of settlement money or buy back bad loans from GSEs. Then, take Goldman Sachs for example. Paulson was its CEO before coming to head the Treasury. That bank was near bankruptcy in 2008 and survived only through a multiple billion bail-out from Warren Buffet. And only yesterday a former Goldman Sachs trader was reported to admit guilty to a fraud concerning a 83 billion affair. Banks or GSEs, each has its own problem and they all need reform and "overhaul", but such reforms or re-organization should be done in a way that is best for the recovery of US economy and hence best for the nation as a whole.
Well said, although we need to convince senator Scott Garrett of this, who seems to be hell bent on killing the GSE's. His actions and motives are now suspect, 'as it appears'. Makes one think he's paid by the banks to serve in their greedy interest. Yesterday's Bloomberg article by James Fenkner titles 'F&F don't deserve capital punishment' summed it up quite lucidly.
There are many smaller community banks and lending (old savings and loans) type entities across the US that purchased and had investments in preferred F&F stock. These shares are not inching their way back - meaning the banks that held on to them are recovering their invested capital. These Vultures as Barney Frank called them (remember every day is a buy hold decision); are now seeing some lift. These folks will be on F&F's side.