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Edward DeMarco, the acting head of FHFA, wrote a letter to some heavy hitters in Washington. Sen. Dodd-Banking, Sen. Shelby-Banking, Congressman Frank-Financial Services and Bachus-Financial Services. The letter was a cry for help. I sincerely hope that these important legislators do not ignore this SOS. If they do, some irreversible damage will have been done. Hundreds of billions of dollars are at stake. Even more significant, the direction of the government's future role in the mortgage market is going to be shaped by the corporate Exec’s at Fannie and Freddie. There could not be a worse outcome.
DeMarco laid it all on the line. He described the terrible mess that Fannie and Freddie are in. His words: “These calls on taxpayer funds are troubling to all of us.”
There was a significant amount of information provided regarding all of the new management at F/F. Those that are dirty from the past are all gone. Both Fannie and Freddie have new private sector Boards of Directors that meet regularly. There was a discussion that it had been agreed that both F/F would not do anything “new”.
As I was reading this I was getting the sense that in some ways DeMarco was mocking the charade that is happening. We have two ‘private sector’ entities with all of the trappings of Boards and high priced corporate talent. And at the same time these two dogs are sucking down taxpayer money at the rate of $10B a month. Losses are now expected to exceed a half a trillion. Why do we need fancy Boards and big buck talent to accomplish that?
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