Fannie Mae: 60 Plus Blasts Senators Favoring “Obamacare For Mortgages”

Fannie Mae Common Securitization Platform Fannie Mae Mortgage Insurance

Fannie Mae

Photo by NCinDC

The 60 Plus Association launched TV and radio advertisements in seven states, a few days back, opposing the Senate Banking Committee Members who are in favor of the recently introduced legislation that, in their view, empowers the government to take control of the mortgage industry. The new legislation is viewed ‘disturbingly similar’ to Obamacare.

Democrat and Republican Senators named in 60 Plus campaign

Three Democrat and four Republican Senators have been named in the campaign. Democrat senators targeted for supporting the Fannie Mae / Freddie Mac reform include Joe Manchin, Mark Warner and Kay Hagan. Republican Senators named include Mike Crapo, Dean Heller, Mark Kirk and Jerry Moran.

The proposed plan from the Senate Banking Committee Chairman Tim Johnson and Ranking Member Crapo, which also enjoys the backing of President Barack Obama, wipes out the ordinary shareholders in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).

Jim Martin, chairman of 60 Plus, expressing his concerns, says that the investors in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) include retirees, teachers, police officers, and firefighters. The new plan will take away their investment and land it in the hands of the government.

Time must be given to investors in Fannie and Freddie

“The Johnson-Crapo legislation would also codify the Treasury’s Third Amendment that has confiscated all money due to Fannie and Freddie’s private shareholders,” Martin said, and added that millions of investors will lose out due to the suggestions included in the Johnson-Crapo legislation. 60 Plus, for its part, is requesting the senators not to force Obamacare into the mortgage industry, but give time to the investors in Fannie and Freddie to recover their investment “that are lawfully theirs.”

According to Martin, the Johnson-Crapo bill will contribute $5 trillion to the balance sheet of the government. Based on the estimates of their financial advisors, Fannie and Freddie are expected to fully repay the 2008 federal bailout this month, says Martin.

The Obama Administration has already included the $179 billion of expected profits from Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) over the next 10 years, in the government’s budget. This profit, according to Martin, belongs to the shareholders, who placed their money in the government-sponsored enterprises, or GSEs.

The 60 Plus Association, established in 1992, is a non-partisan seniors advocacy group. The TV advertisement from the association can be viewed here.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)



About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

5 Comments on "Fannie Mae: 60 Plus Blasts Senators Favoring “Obamacare For Mortgages”"

  1. AustrianSchool | Apr 3, 2014, 1:43 am at 1:43 am |

    That commission , like so many government commisions was created with a particular agenda, they excluded key people that had identified the housing bubble years before it popped. They weren’t the only cause, but one of the larger ones. They purchased huge amounts of subprime mortgages, which gave the private banks an outlet to originate yet more subprime mortgages. Congress was being bought off by the ill gotten gains from the GSEs. Any effort to rein them in for example the effort to stop them from investing in subprime MBS was squashed by their influence in congress which oversaw the regular of the GSEs.

    There is no such thing as loosing the government guarantee becaise even before they were bailed out by the government, everyone acted as if they had a guarantee, which turned out to be true. They’re an un-natural distortion int the housing market. I understand particular interests are getting rich off the subsidy they provide, but they’re hurting the rest of the whats left of a real economy by causing an over-investment in what amount to a consumption good, residential housing. I always thought it was ironic that the agencies that said they were created to make housing affordable drove the kind of hoosing cost inflation that made it unaffordable.

    I agree FMIC is crap because it’s more of the same, but at least we’d be done with Fannie and Freddie.

  2. Richard Thompson | Apr 3, 2014, 12:53 am at 12:53 am |

    The Financial Crisis Inquiry Commission, Government Accountability Office, Harvard Joint Center for Housing Studies, and the Federal Housing Finance Agency determined Fannie and Freddie were not responsible for the crisis. It was congress’s fault as well as the banks.

    I understand people are pissed about bailouts but the system worked fine until congressional policy compromised underwriting standards. Maybe a better solution is to let them recapitalize but lose the government guarantee. This FMIC proposal is crap, and simply a GSE replacement. It accomplishes nothing.

  3. Close them down, they’re an anathema to capitalism. They’ve already caused so much damage to our economy. Crony capitalism at it’s worst.

  4. You got it backwards, they need to shut down the GSEs for good and not replace them with another government intervention in the mortgage market.

  5. These senators need to be shown the door. Useless.

Leave a comment

Your email address will not be published.