Vitter brought up the hedge-fund lobbying campaign during a hearing April 18. He asked Edward J. DeMarco, regulator of Fannie Mae and Freddie Mac, what he thought would happen if Treasury’s stake in the companies were sold off in the absence of a restructuring of the mortgage finance market. DeMarco said such an about-face would generate confusion.
“It would certainly conflict with the notion that we’re trying to bring private capital back into this marketplace,” DeMarco said.
Corker, in the interview, said he’s been blunt with the hedge funds that hope to profit by betting that the two companies will stay alive.
“I tell them it’s a lottery ticket at best,” Corker said. “I just don’t see any appetite in Congress for Fannie and Freddie ever being returned to the private market.”
Sentiment: Strong Sell
Since we are pulling quotes out of the Bloomberg article, why not present both sides. You seem to discount James Millstein's hypothesis of how to resolve the f&f issues. He also warns of the consequences of mishandling a wind-down. As much as politicians do not want to be linked to f&f, they also don't want to be blamed for another housing disaster. My bet on owning Fannie stock is just as risky as the wrong decision to deal with f&f. You make a compelling argument, but nothing is set in stone.
“If policy makers get the size or pace of a forced wind- down wrong, we will suffer a credit contraction, house prices will fall and the U.S. economy will once again be at risk for a recession,” he told the House Financial Services Committee April 24.