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David Faber: Fannie, Freddie Bailout Heads Back To Court


The Faber piece on the Fannie bailout court battle should be considered in the context of the Financial Times story below. Pay particular attention to the final paragraph. My thoughts are simple. Five times every day, including weekends with the family in the Hamptons, Tim Mayopolous should be forced to bow his head in prayer and thanks to the American taxpayer. We saved Fannie and Freddie when no one else would, at an upfront cost to taxpayers of more than $250 billion.

He can kiss our collective asses. We own these bastards. These are our profits.


CNBC FABER REPORT -- Recently unsealed documents could weaken the government's defense as it goes head to head with a hedge fund in court over the bailout of Fannie Mae and Freddie Mac. The oral arguments on Friday in the D.C. Court of Appeals are part of an appeal Perry Capital filed after losing a lawsuit that alleged the government was taking profits that belong to shareholders.




Financial Times -- Fannie Mae, the state-sponsored U.S. mortgage backer, is at risk of needing a government bailout that could shake confidence in the housing finance market, senior officials have warned. Fannie Mae's chief executive and its regulator are sounding the alarm on a decline in the institution's capital cushion, which is on course to vanish in 2018, when it would have to ask the US Treasury for emergency funds.

Because the government does not let Fannie Mae retain profits, Tim Mayopoulos, its chief executive, told the Financial Times on Friday that its capital buffer, which has dwindled from $30 billion before the crisis to $1.2 billion today, was on track to disappear by January 2018. At that point it would be unable to weather quarterly losses and would need to draw on Treasury funds to avoid being placed into receivership.

A Treasury spokesman said: "Taxpayers injected $188 billion into Fannie Mae and Freddie Mac to stabilize the housing market and lay the groundwork for our economic recovery. Director Watt's remarks underscore the administration's consistent position regarding their conservatorship: the best long-term solution is comprehensive housing finance reform. Until then, Fannie Mae and Freddie Mac will continue to rely on the $258 billion of taxpayer provided support to sustain market confidence."

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Reader Comments (3)

Apr 18, 2016 at 12:15 PM | Registered CommenterDailyBail
Agreed, taxpayers should get something akin to a risk-adjusted return, which during the crisis was probably upwards of 20 percent. However, there is a line to cross to a taking and that line has probably been crossed in this case.
Apr 18, 2016 at 1:09 PM | Unregistered CommenterVern McKinley
(paulson, bob corker, obama, jack lew, warner, demarco)

Apr 18, 2016 at 2:10 PM | Unregistered Commenterspd

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