“I want to make clear, the Obama administration believes the risks are too great that this model would recreate the risks of the past,” Sperling said today in a Washington speech.
Public policy written and passed by the elected officials is what torpeadoed Fannie and Freddie. Fannie and Freddie worked fine for 50 years. Their business model is fine if elected officials don't manipulate them into forcibly receiving junk loans. Another example progressive liberals trying to give free stuff away to people who are not willing to work for it. Fannie and Freddie are coming back with a vengance. Current administration cannot continue to steal from them much longer and the elected officials know it.
This is not new. Obamma has been an enemy of fannie shareholders since he took office. His idea is to take fannie shareholders money and use it for his social projects, namely health care.
"President Barack Obama would reject proposals by hedge funds to recapitalize Fannie Mae (FNMA:US) and Freddie Mac (FMCC:US), National Economic Council Director Gene Sperling said."
President Obama is opposed to take over for control of Fannie and Freddie by private hedge funds. But he is not opposed to Fannie and Freddie retaining their profits to build up their capitals. I am sure that Sperling was one of the architects of the Sweep Agreement and is leaving the Administration like all other architects left!
IF it is only opposition to HF takeover, then yes, it can be perceived as good news. However, the article does not say that. It says re-capitalization (in general) is considered a bad route because of "past failures".
Yahoo is deleting my message when I state that opposition to re-capitalization (which means wiping out existing shareholders) is not the same as F&F retaining their profits to build their capital without wiping out existing shareholders. The statement by Sperling confirms that President Obama will not transfer control of F&F to private hedge funds and banks in any sweet-heart deal. This leaves private hedge funds and banks to buy F&F shares cheaply in the open market. They were counting on swaying President Obama to cancel the existing shares so that they did not have to cover their shorts and get F&F from the government in a sweet-heart deal. This will not happen. The press is engaged in a misinformation campaign.
“I want to make clear, the Obama administration believes the risks are too great that this model would recreate the risks of the past,”
DID HE read the proposal? NOPE. I want to make it clear, they dont want the backing of the USA.
the risks of the past is with deregulation of banks. THESE GUYS ARE IDIOTS. FDR knew what he was doing.