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Inside The GSEs

July 23, 2008

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Is The GSE Bill in Need of a Major Overhaul?

For years Congress has struggled to balance the private ownership of Fannie Mae and Freddie Mac with the government’s sponsorship of the two mortgage giants. But with lawmakers hurrying this week to finally pass GSE regulatory reform legislation, the balancing act appears to be over. Not only does the current GSE legislative package send some very mixed messages to the world about... Read More

Do FHLBanks Want Emergency Financial Aid?

The Treasury Department included the Federal Home Loan Banks in its controversial proposal to financially backstop Fannie Mae and Freddie Mac in the event of severe duress – even if the Banks don’t really want it. Treasury’s initial announcement seemed to suggest only Fannie and Freddie obligations would be covered, mostly because of some ambiguous working. However, legislation drafted by the... Read More

FRE Registers With SEC, Prepping for Capital Raise

Freddie Mac last week completed its registration application process with the Securities and Exchange Commission, a move some critics believe should have happened five years ago. However, like rival Fannie Mae, Freddie has spent years and millions of dollars on a comprehensive financial restatement, as well as an overhaul of accounting policies, systems and internal controls, processes that... Read More

GSE Stock Prices Recover a Bit From July Battering

Stock prices for Fannie Mae and Freddie Mac have rebounded somewhat from historic lows reached early last week, but the enormous loss in market capitalization for the two GSEs remains arguably their biggest challenge. The GSEs – along with many financial services firms – saw their stock prices driven down to record lows on July 15, closing at $7.07 (Fannie) and... [Includes one chart] Read More

Senators Urge GSE CEOs be Held More Accountable

At a time when Fannie Mae and Freddie Mac have lost billions of dollars in earnings and market capitalization, and slashed dividends for investors and retirement prospects for their own employees, the GSEs’ chiefs made a combined $30 million in total compensation. The recent losses have prompted two members of the U.S. Senate to write Treasury Secretary Henry Paulson to express their outrage... Read More

Treasury’s GSE Backstop Could Cost $25 Billion

Treasury Secretary Henry Paulson’s controversial proposal to have the federal government provide a just-in-case financial backstop to Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks, could cost $25 billion over a two-year period, according to a government analysis this week. On Tuesday, the Congressional Budget Office released an analysis of the Treasury proposal... Read More

Treasury’s GSE Man, Steel, Departs for Wachovia

The Goldman Sachs makeover of the Treasury Department is beginning to fade, as Robert Steel, Treasury undersecretary for domestic finance, one of the Bush administration’s point men on all things GSE, resigned July 9 to take over as CEO and president at Wachovia.His resignation was effective immediately. Steel’s departure comes at a critical juncture in the history of... Read More

FDIC May Still Threaten Advances Over Covered Bonds

The Federal Deposit Insurance Corp. has issued its final policy statement on the treatment of covered bonds in the event of a bank failure, opting to include Federal Home Loan Bank advances within the definition of “secured liabilities,” going against the wishes of a number of the FHLBanks. However, it does not impose a cap on FHLB advances, a position advanced by the Mortgage Bankers... Read More

News In Brief

FHLBank Combined Net Income Up 3.2 Percent From First Quarter: The Federal Home Loan Bank Office of Finance released... Fannie, Freddie May Have to Post More Writedowns, OFHEO Says: Fannie Mae and Freddie Mac, long seen as nearly impervious to the massive... San Francisco FHLBank Says IndyMac Advances are Secured: The Federal Home Loan Bank of San Francisco announced recently that its... Read More

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