Fannie Mae & Freddie Mac – Senator Mark Warner’s Financial Disclosure by Travis Rothell and Jacob Wolinsky
On June 25, 2013 Senator Bob Corker (R-TN) and Senator Mark Warner (D-VA) introduced The Corker-Warner Housing Finance Reform and Taxpayer Protection Act (S.1217) to wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. After reviewing senate financial disclosures from 2006-2008 it has come to light that both Corker and Warner were shareholders in Fannie Mae and Freddie Mac, of which they both took financial losses due to the subprime mortgage crisis. In a Financial disclosure dated 2009 Mark Warner disclosed many subprime mortgage investment including the infamous Countrywide. We now must ask ourselves two questions, the first being can two individuals that sustained personal losses in the GSEs look at the situation non-biased. It is impossible to answer this question but it should be noted especially when one looks at Corker’s recent comments and actions regarding GSE reform.
The second question, is the same senator that personally invested in subprime mortgages such as Countrywide qualified to write legislation that changes the landscape for the mortgage industry. He obviously looked at the subprime mortgage investments pre 2008 and decided that these were sound investments, do we want that same logic applied to fixing the troubled housing industry. Jacob J. Lew the current Secretary of the Treasury in a public financial disclosure dated January 11th of 2009, disclosed investments in both Fannie Mae and Freddie Mac. Lew’s Fannie Mae investment was valued between $15,000-$50,000. Fannie common shares traded at $0.74/share on January 9th of 2009, which could indicate that Lew held between 20,000-67,000 shares. If we look back to pre 2008 crash Fannie Mae shares traded as high as $67/share, this would indicate that Lew potentially took massive losses. Does this constitute a conflict of interest? The man responsible for upholding the “Net Worth Sweep” for the very companies that he took losses in. Can Lew look at this situation non-biased, I think this is an important question. Additionally, Lew would appear to have many conflicts of interest with Citigroup (NYSE:C) as this form shows.
Investments in Fannie Mae and Freddie Mac
Senate Financial Disclosure Available Here.
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