A new group, Investors Unite, urged Congress Wednesday to stop moving ahead with a bill to wind down Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).
The latest move signifies a frenzied push to influence the housing finance debate.
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On Monday, another new tax-exempt group called Coalition for Mortgage Security said it would campaign for legislation that protects the rights of investors in the bailed-out mortgage-finance companies. Its director Ken Blackwell, a Republican politician who served as Ohio’s state treasurer and secretary of state, said the group didn’t support the Johnson-Crapo bill, which the Senate Banking Committee is set to vote on as soon as April 29.
Last week, a conservative seniors group, the 60 Plus Association, began a $1.6 million television and radio advertising campaign against the Johnson-Crapo bill, targeting seven senators that have voiced support for a housing-finance overhaul.
To protect shareholders’ rights
The new coalition of investors in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) launched an effort to stop Congress from moving ahead with a U.S. housing finance reform bill. The group argues the bill would deny them a fair share in any remaining value in the two companies. The Investors Unite group is holding meetings in Washington and sending dozens of investors to Capitol Hill to promote its cause.
The group opposes the bill as it would prevent the GSEs from recapitalizing and compensating shareholders. The coalition’s leader, Tim Pagliara, said the bill needs further study. He told a news conference that government officials have been misleading the public about the health of the two GSEs since they were taken over in 2008.
Aided by strong home-price gains in housing markets across the U.S., Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) said last month it would pay $7.2 billion to the U.S. Treasury in April. The proposed payment means Fannie Mae and Freddie will do what many considered impossible just two years ago. They will have paid more in dividends to the government – around $192.5 billion – than the $187.5 billion they received from the U.S. Treasury for their 2008 bailouts.
Tim Pagliara organized a Wednesday visit of about 50 Fannie and Freddie shareholders to Capitol Hill to deliver a message to stop what they view as the government’s rip-off of the GSE investors. Earlier Mr. Ralph Nader, a vocal critic of the government’s treatment of the shareholders was also scheduled to take part in the press conference with the coalition called Investors Unite.
Tim Pagliara, whose firm’s clients own 8 million shares of the two GSEs’ preferred stock said: “This needs to be solved in Congress. It’s a cowardly act to throw that back at the court system”.