Fannie Mae – AG Nominee Signals A Change In Approach: Bove

Fannie Mae – AG Nominee Signals A Change In Approach: Bove

Fannie Mae

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When Mel Watt spoke at the Brookings Institution earlier this year, Rafferty Capital Markets VP of equity research Richard Bove saw the change in direction as a big win for Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders. And while Watt has been clear about where he considers his obligations to lie, there’s not question that he has taken the FHFA, Fannie Mae and Freddie Mac in a different direction than his predecessor Ed DeMarco, and Bove argues in a report sent out earlier today that the nomination of Loretta Lynch as Attorney General signals a similar sea change in policy.

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“DeMarco’s job was to focus on instituting operating disciplines in the system. He also used his ability to punish the banks as much as he could extracting tens of billions in payments from them,” Bove writes. “[Watt] is now working to help stimulate growth in the housing industry rather than attempting to punish banks. The selection of Loretta Lynch for the post of Attorney General of the United States, if the press is correct, would be a move similar to the one in which Mel Watt was selected.”

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Lynch has no history of going after banks

In case there was any doubt, Bove believes that Holder used extra-legal means to pursue political goals and has (at least in Bove’s mind) wrecked the credibility of the Attorney General’s office. He even tries to lay American distrust of the Federal government at Holder’s feet, which is more than a bit of a stretch.

But he points out that Lynch, who served has served as a federal prosecutor first from 1999 – 2001 and from 2010 until now, doesn’t have a history of going after banks or other companies involved in the sub-prime crisis. If President Obama wanted to continue applying pressure to Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) he could have nominated any number of had been involved in prosecuting fraud cases (and other banking misdeeds) in recent years.

Fannie Mae: Bove sees significant in the nomination, even if Lynch isn’t confirmed

Lynch will have to be confirmed by a Republican Senate looking for easy victories to start of the new term, so there’s no guarantee that she will be the next Attorney General (though there’s no obvious reason she shouldn’t be). Regardless of who is ultimately confirmed, Bove reads a lot into the choice itself and believes that it’s another quiet sign of the administration changing its position on how it deals with banks.

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Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.
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  1. Isn’t it time to tell the truth about Fannie and Freddie? How the Govt lied to us all and USED fannie and freddie to bailout the BANKS? How the FHFA and Treasury Took over F&F and made them sign over their companies in DURESS, with threats? How the Treasury lied to congress about TARP? Is it not time for truth? How much money must be TAKEN by the US TREASURY before the truth of such taking is told to the public? How the housing market was saved by Fannie and Freddie and How the banks and PLS nearly trashed the USA?

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