"American elites continue focusing on a global order while ignoring the decline of the United States. A broken America will be unable to meet any geopolitical threats abroad. Any national security strategy that does not begin with securing our own national security at home will be doomed to fail." DANIEL GREENFIELD
Knowing that the wall
will become a reality if the President gets the cash brings out the
cheap-labor-express, wealthy power brokers like the Billionaires
for Open Borders: Michael Bloomberg; Rupert Murdoch; other distinguished
members of the Forbes 500; and, as Lou Dobbs often reminds us, the
"globalists, the Chamber of Commerce, the Business Roundtable, Koch
brothers and Wall Street."
“Our
entire crony capitalist system, Democrat and Republican alike, has become
a kleptocracy approaching par with third-world hell-holes. This
is the way a great country is raided by its elite.” ---- Karen
McQuillan THEAMERICAN THINKER.com
WALL STREET BANKSTERS AND THEIR BOUGHT
DEMOCRAT POLS PREPARE FOR THE NEXT WAVE OF BOTTOMLESS NO-STRING BANKSTER
BAILOUTS…
Will this one finish off the American economy?
*
Considering her record and documented
history of poor ethical and moral fitness, it’s outrageous that Maxine Waters
is up for chair of the ultra-powerful House Financial Services Committee, which
has jurisdiction over the country’s banking system, economy, housing, and
insurance.
"Wall Street billionaires
are pushing a new plan to swipe the profits of Fannie Mae and Freddie Mac from
U.S. taxpayers–and in the process revive the system of privatized-profits and
public-risk that contributed to the severity of the Great Financial
Crisis."
The Moelis plan stands out as
a strikingly bold grab for control of the companies and their profits. It calls
for the dividend payments to the Treasury to cease so that the companies can
rebuild capital. Shockingly, it also calls for the cancellation of the senior
preferred stock altogether–with no
compensation for the past risk and future profits currently
due to taxpayers. It is as if a company proposed to do a stock buyback by
proposing to cancel its shares rather than purchasing them for cash.
*
So
will Maxine Waters be the crusading financial protector of our 401k plans and
save America from the next financial bubble? Well, there will certainly be lots
of harassment and shakedowns. But don't count on her steering us clear of Wall
Street excesses. If history is any guide, Mad Maxine will be way too busy
raising money from the people she is now in charge of regulating. Stephen Moore is a senior fellow at The
Heritage Foundation
*
Waters,
who represents some of Los Angeles’ poorest inner-city neighborhoods, has also
helped family members make more than $1 million through business ventures with companies and causes
that she has helped, according to her hometown newspaper. While she and her
relatives get richer (she lives in a $4.5 million Los Angeles mansion), her constituents get poorer.
JUDICIAL WATCH
DEMOCRAT PARTY CORRUPTION
"This is how they will destroy
America from within. The leftist billionaires who orchestrate
these plans are wealthy. Those tasked with representing us in Congress will
never be exposed to the cost of the invasion of millions of
migrants. They have nothing but contempt for those of us who must
endure the consequences of our communities being intruded upon by gang members,
drug dealers and human traffickers. These people have no intention
of becoming Americans; like the Democrats who welcome them, they have contempt
for us." PATRICIA McCARTHY
Report:
Trump Administration Plans Jailbreak for Fannie and Freddie
https://www.breitbart.com/economy/2019/01/18/report-fhfa-acting-chief-plans-to-set-fannie-mae-and-freddie-mac-free-from-government-control/
12:26
The Trump administration is planning to end the
conservatorships of Fannie Mae and Freddie Mac, according to a report from
MarketWatch.
Joseph Otting, who is serving
as the Federal Housing Finance Agency’s acting director while Mark Calabria
awaits Senate confirmation, told an “all hands gathering” on Thursday that
plans to release the two government-sponsored mortgage giants from
conservatorship would be announced within weeks, MarketWatch reported.
An
agency spokesperson confirmed to MarketWatch that there was a discussion about
ending the conservatorships but denied Otting had put a timeline on any
announcement.
Breitbart TV
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“Acting
Director Otting held the internal meeting to meet FHFA staff and establish open
lines of communication,” the FHFA said in a statement to MarketWatch. “He
mentioned, as he previously has, that Treasury and the White House are expected
to release a plan for housing that will include details about reform and will
likely include a recommendation for ending Fannie Mae and Freddie Mac
conservatorships. [Treasury] Secretary Mnuchin has said that the goal of the
[Trump] administration is to take the GSEs out of conservatorship. Acting
Director Otting said that he and FHFA will work to advance that plan.”
A History
of Deception, Manipulation, Financial Domination, and Collapse
Fannie
and Freddie do not make mortgage loans. They buy loans made by banks and other
lenders, package them as mortgage-backed securities, and guarantee payments on
those securities. This provides mortgage lenders with cash and relieves them
from having to meet capital requirements on those loans. In addition, when
banks make mortgages that can be sold to Fannie and Freddie, they get relief
from a variety of regulations, including Dodd-Franks’ requirement that lenders
hold 5 percent of the risk on loans they make.
Fannie
and Freddie’s vast market power, together they backed around 44 percent of all
new mortgages last year, means they exercise an enormous influence on what kind
of loans lenders make and which borrowers receive loans. Conservative critics
say this played a role in fueling the housing bubble as both companies pushed
lenders into taking excessive risks. Even today, many lenders seek to make
loans tailored to meet Fannie and Freddie’s goals.
Both
companies could borrow at extremely low costs, near the risk-free rate enjoyed
by the federal government, because investors assumed they had the backing of
the federal government. This so-called “implicit guarantee” arose because the
companies were originally established by the U.S. government, were chartered by
an act of Congress, and had numerous exemptions from taxes and regulations that
marked them as pseudo-government entities.
The
low funding cost boosted profits at the companies and allowed them to
accumulate vast portfolios of mortgage-backed securities. These portfolios were
highly profitable but also vastly increased the risks the companies were
taking. They did not require much financial acumen to make money, however,
because all the companies had to do was borrow at low interest rates and use
that money to buy securities packed with mortgages that paid higher rates.
At the height of their power,
Fannie and Freddie also exercised vast political influence. The companies used this
influence to control the Office of Federal Housing Enterprise Oversight, the
agency charged with regulating them before it was replaced by the FHFA, and to lobby Congress to keep their capital
requirements dangerously low and fend off attempts to impose more stringent
regulation.
“Fannie Mae management
expected to write the rules that applied to the Enterprise and to impede
efforts at effective safety and soundness regulation,” a 2006 report by
government examiners concluded.
That
report found:
A
combination of factors led Fannie Mae senior management, through their actions
and inactions, to commit or tolerate a wide variety of unsafe and unsound practices
and conditions. Those factors included the Enterprise’s enormous financial
resources and political influence, the expectation that senior management could
write the rules that applied to Fannie Mae, financial rewards tied to a measure
of profits that management could easily manipulate, and the relative
disinterest of senior executives in adhering to standards of prudent business
operations.
The
report concluded that although Fannie Mae’s senior management promoted an image
of the company as one of the lowest-risk financial institutions in the world,
its true risks were “greatly understated and that the image was false.” Its
seemingly smooth and reliable earnings were “illusions deliberately and
systematically created by the Enterprise’s senior management with the aid of
inappropriate accounting and improper earnings management.”
The
companies and their executives vigorously denied the charges. Some of their
defenders, including then-Congressman Barney Frank, insisted there was no
implicit guarantee covering the companies–a position that would prove
embarrassing when the companies were in fact rescued by the government.
In
2006, Fannie had to restate its reported earnings by $6.3 billion to correct
several years of accounting problems in what was then one of the biggest
financial scandals in U.S. history. Freddie also restated earnings by billions
of dollars for multi-year accounting problems.
Two
years after the special examiner’s report, both companies were on the verge of
collapse.
After a
Bailout, Hedge Funds Sue Seeking Windfall
Fannie
and Freddie were bailed out at the height of the financial crisis and put into
conservatorship by the FHFA. Over the next few years, the government injected
$187.5 billion of new capital to keep the companies solvent. In exchange, the
government received warrants for a 79.9 percent stake in the companies and
senior preferred stock that initially paid a 10 percent dividend. In 2012, the
dividend was changed from fixed to floating, requiring the companies to pay all
of their profits to the government but relieving them of the burden to pay in
quarters that result in financial losses. That arrangement has come to be known
as the “net worth sweep” because the companies pay all of their positive net
worth to Treasury.
When
the companies were first put into conservatorship, many in the government
underestimated the size of their financial losses and assumed they would be
rehabilitated and released. Others believed Congress would pass legislation
that would create a replacement for the liquidity and guarantee roles played by
Fannie and Freddie.
Congress
has attempted several times over the years to enact housing finance reform
legislation but those efforts have failed due to conflicting views about the
government’s role in the mortgage market. Conservative and libertarian
lawmakers would like to see the government step back from supporting such a
large portion of the market for home loans, with some advocating no government
backstop at all. Liberals and self-styled affordable housing advocates insist
that some sort of government support is necessary to promote home ownership and
keep mortgages affordable and available for lower-income Americans.
Several
hedge funds and other institutional investors bought up shares of Fannie and
Freddie in hopes that they would be released from conservatorship and allowed
to return to control by shareholders. Many of these investors purchased junior
preferred shares that were trading at deep discounts to their face value.
Others purchased common shares. Those that bought before the net worth sweep
was introduced in 2012 have done very well. Shares that once traded at less
than 25 cents were trading at above $1.80 on Thursday, a 640 percent rise,
before they jumped higher when the MarketWatch story broke.
Despite
these gains, some of the investors have sued the government seeking to end the
conservatorships and have the courts strike down the net worth sweep. At first,
the fund managers described their lawsuits as surefire winners, calling the net
worth sweep “clearly illegal.” Some investors were so confident that they
bought shares after the sweep was implemented. Bill Ackman’s Pershing Square
became the largest holder of common stock years after the sweep was introduced.
The
federal courts have not agreed with the investors. Nearly all of the many
lawsuits filed by investors have been dismissed by courts, with many of those
dismissals surviving challenges in appeals courts. A few cases remain
outstanding, including one in the Federal Court of Claims where investors have
said the sweep amounts to an unconstitutional “taking” of their property
without compensation.
A Dark
Money Campaign Waged by Hedge Funds
But hedge funds have not
relied solely on the courts in pursuit of a Fannie and Freddie windfall. Behind
the scenes, they have deployed a shadowy campaign to influence various Washington D.C. groups to take
their side. This has included donations to civil rights groups, affordable housing
advocates, and a campaign to convince conservatives that the net worth sweep is
an affront to property rights. At one point, advocates for overturning the net
worth sweep resorted to falsely claiming that profits from Fannie and
Freddie were being illegally used to fill a budget hole created by Obamacare.
Mark Calabria, now serving as
an advisor to Vice President Mike Pence and awaiting Senate confirmation for
the job of running the FHFA, co-wrote a paper in 2015 arguing that the government’s
treatment of Fannie and Freddie was not in keeping with the Housing and
Economic Recovery Act of 2008. Calabria, then a policy expert at the
libertarian Cato Institute, had served as a staffer on the Senate Banking
Committee and had a hand in drafting that law. His co-author, Michael,
Krimminger, is an attorney who had served in policy leadership positions with
the FDIC. When their paper was released, they presented their
analysis on a media teleconference sponsored by Investors Unite,
a group formed to advocate for shareholders of Fannie and Freddie.
The
arguments in the Calabria-Krimminger paper were later used by attorneys for
investors as part of their legal brief.
In the absence of Congressional
action, many have been urging the Trump administration to act unilaterally to
release Fannie and Freddie from conservatorship. The investment banks Moelis
& Co this fall re-introduced its plan to have the agencies released. It
calls for the government to surrender its senior preferred shares in
exchange for nothing. Instead, the government would exercise its warrants and
control just under 80 percent of the company–essentially giving away the other
20 percent to the hedge funds and other shareholders. Some investors say shares
could rise to as high as $20 to $40 under this plan.
In December, a group of some
of the nation’s most prominent and respected housing finance experts authored
an op-ed condemning the Moelis plan:
Taking
advantage of this congressional impasse, several of Fannie and Freddie’s
largest investors have banded together to advocate a path out of this state of
limbo. Remarkably, however, the path does not lead to a new system as
policymakers had intended, but back to the very system we had before the
crisis. Yes, the one that nearly took down the economy.
To
their credit, the investors recommend retaining some of the reforms that have
taken place in conservatorship, such as limits on what Fannie and Freddie can
invest in, and higher capital levels. But they would leave untouched the
fundamental structural flaw that was the system’s ultimate undoing: the
dominance of a duopoly that is too big and too important for the nation ever to
let fail.
This
makes sense from the investors’ point of view, as Fannie and Freddie’s market
power will bring them more profits. But it is absurd from the nation’s point of
view.
By
once again standing behind the solvency of these two institutions, which
taxpayers would have to do for the very reasons we could not let them fail the
last time around, we would again give Fannie and Freddie the incentive to take
outsized risks.
Otting,
Mnuchin, Mulvaney, and Moelis
It
is not clear if Otting’s plan to release the companies is modeled after the
Moelis plan or if Calabria also agrees the companies should be released from
conservatorship.
Otting
is a former banking executive and associate of U.S. Treasury Secretary Steve
Mnuchin. Sources close to the White House say he is part of the
“banker/globalist/Davos” wing of the Trump administration. Prior to becoming
the chief at Office of the Comptroller of the Currency and acting head of the
FHFA, he was chief executive officer of OneWest, the California lender started
by Mnuchin after the 2008 housing crisis. OneWest was built from the ashes of
the failed California lender IndyMac. Along with Mnuchin, investors included
billionaire hedge fund manager John Paulson and left-wing donor George
Soros. OneWest was sold to CIT Group in 2015.
“He’s
not deep state, but he’s deep Wall Street,” one Trump administration official
told Breitbart News.
Wall
Street certainly cheered the news that the companies could be released. Shares
of Fannie and Freddie moved sharply higher on Friday, jumping 35 percent to
more than $2,40.
Shares
of Fannie and Freddie have moved on comments by Trump administration officials
in the past. Even before the president was sworn in, Trump’s pick for Treasury
Secretary Steven Mnuchin said that privatizing the two companies would be a top
priority for the administration. He later clarified that the administration
planned to work through Congress for comprehensive housing finance reform
rather than unilaterally releasing Fannie and Freddie.
Last
year, however, Mnuchin said that he expects Congress to enact housing
finance reform in 2019 and that the administration could take action on its own
if Congress does not act. Some inside the Trump administration feared that
could wind up as a push to adopt the Moelis plan.
Mick
Mulvaney, the White House’s budget director and the acting head of the Bureau
of Consumer Financial Protection, is also viewed as a potential ally of those
pushing the Moelis plan. As a Congressman, Mulvaney sponsored a
bill that offered “a bonanza for hedge funds seeking to cash in on their
investments in Fannie Mae Mae and Freddie Mac—but the cost to taxpayers would
[have been] steep.” That bill died on Capitol Hill for lack of support.
The
government continues to support Fannie and Freddie even though the two
companies have returned to profitability. Treasury continues to promise to
support the companies with over $220 billion of bailout funds should they need
it. And the Federal Reserve has bought hundreds of billions of their
securities, often buying more than the companies issued in a given month.
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