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Federal Home Loan Mortgage Corporation Message Board

  • tng6204535 tng6204535 Jul 8, 2013 3:53 PM Flag

    the goverment had more than half a century to

    give notice to investors that they had no intentions of guaranteeing the portfolios of the GSE , now they want to punish shareholder for the incompetence of their policies....the whole world invested with this notion and now they wont own up to it...this makes our political system as inept as that of some third world country.

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    • The government never said they would guarantee the portfolios of the GSE. They gave them a line of credit at the Treasury so they would never have a liquidity problem and could always pay their bills. Their charter also mandated a minimum statutory capital requirement. When the charters were done, residential mortgages were always kept on the books at book value, there were no mortgage backed securities (except the ones that Fannie Mae and Freddie Mac and Ginnie Mae created), and there were no derivatives (at least none that would have been used by Freddie Mac). Using the accounting rules of the 1970's there was no way that FMCC could have violated their statutory capital requirement. Jump ahead to 2008 and mark to market accounting with assets that did not even exist when their charter was written, they violate their statutory capital requirement and what happens?

      Now we know and it is not good for shareholders. I am still hoping that the original conservatorship agreement is reinstated. pay the treasury 10% on preferred stock and give the government 80% of the company. At the least us common shareholders end up with something. Owning and securitizing mortgages has been a good business for a long time. No reason to believe it will not be a good business in the future.

    • excellent point indeed....i think this newest lawsuit will address it...what's you general feeling about the future now?

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