Reuters op-ed writer Bethany McLean wrote a piece on Ralph Nader’s recent work as a shareholder activist last week, and she painted Nader in a less-than-flattering light as a “flip-flopper” on the subject of Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). Nader published a letter in Reuters last Friday as a rebuttal to McLean’s “confusion” regarding his positions.
McLean insinuates greed
McLean’s article points out that Nader was a vocal critic of both government-sponsored enterprises as far back as the 1990s, and insinuates that his current support for Shareholder Respect (a lobbying organization advocating a return to shareholder ownership of the GSEs) might have something to do with his personal positions in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). She details Nader’s long history as a critic of the GSEs, including his comment “We are obviously not talking about GSEs interested only in providing the American dream of home ownership,” Nader said. “They have a big appetite that grows bigger as they saturate the mortgage market. They will reach out for more to maintain their high level of profits and shareholder dividends.”
Nader rightly points out that McLean is conflating two separate issues. He freely admits he was a critic of the corrupt practices of the GSEs a decade or so ago, but he contends that is a separate issue from advocating for shareholders’ right as he is today.
“In the 1990s and early 2000s I opposed corruption in the government-sponsored enterprises (GSEs). I was clear about my admonition of the government subsidies they received in the form of an implicit government guarantee without meeting their obligations to advance affordable housing. I was clear that their drive for profits could tempt them deeper into murky legal waters. My opposition to their management compensation packages and questionable accounting practices were made plain.
Now I am advocating for the Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s shareholders’ rights. This is an issue separate from the previous transgressions and corruption.”
Nader’s work with Shareholder Respect/Restore Fannie Mae
In working with Shareholder Respect, Nader has been supporting a group called Restore Fannie Mae who advocates “an end to the unconstitutional conservatorship of Fannie Mae and Freddie Mac by the U.S. government.” Nader has written an op-ed in the Wall Street Journal, “The Great Fannie and Freddie Rip-Off” and sent a letter to Treasury Secretary Jack Lew. Nader also recently held a public roundtable to discuss the issue.