A group of Senators have warned Mel Watt saying a failure to make a dividend payment to the Treasury could “harm legislative efforts”. Now, if we go back into our magic little time machine almost a decade ago to 2008, the year Fannie Mae and Freddie Mac (the GSE’s) were placed into “temporary conservatorship” (only in Washington is “temporary” a decade) they were done so to be “rehabilitated”. At no point was the goal to “replace” or “redo” them.
Fast forward in our little time machine 9 years and we have Senators saying to Mel Watt “we are working on something”. Really?? What’s the rush?? The reality is there is no legislative fix coming and there hasn’t been one coming since 2008. The Senate is not even remotely close to putting anything together and every single Senator who signed that letter knows it and is lying if they say anything different. Only two deeply flawed bills even made it out of committee and neither even came close to sniffing a vote on the Senate floor……..in 9 years!!!!No, this is a dog and pony show. Corker may be the most disingenuous Senator holding a seat today and is wholly blinded by ideology and painfully divorced from reality.
There will not be any legislative “fix” coming until one is forced. Watt with holding these payments would jump start that process. Mnuchn could also do it by simply telling FHFA not to send them.
This is classic Washington (via Bloomberg):
A bipartisan group of senators told Mel Watt, the regulator who oversees Fannie Mae and Freddie Mac, that he shouldn’t allow the companies to recapitalize without congressional approval.
Letting the U.S.-controlled mortgage giants build capital buffers would hurt legislative efforts to overhaul the housing-finance system, the senators said in a letter Wednesday.
The letter to Watt, who is director of the Federal Housing Finance Agency, was signed by Republicans Bob Corker of Tennessee and Thom Tillis of North Carolina, as well as Democrats Mark Warner of Virginia, Heidi Heitkamp of North Dakota and Jon Tester of Montana.
Full article here