What is going to need to happen is that Fannie and Freddie need to be moved out of conservatorship or this won't end," said Anthony Sanders, senior scholar with the Mercatus Center at George Mason University in Fairfax, Va. It may be heretical for an elected official to suggest that renting is the new American dream.
But as long as home ownership is still held up as the pantheon of financial success and a goal for all Americans, expect more of the same from Fannie and Freddie. Ourso College of Business in Baton Rouge. Until that changes, nothing will change at Fannie Mae and Freddie Mac," he added. So what's the solution for Fannie Mae and Freddie Mac? They need to be weaned off the government dole. Instead of having FHFA foofa!
Yes, I realize that's asking the same people who helped contribute to the financial calamity to become more involved again. But that's still a better alternative than the status quo. It's not going to happen now given the state of the market, but continuing to use Fannie and Freddie to stimulate housing is not feasible," said Brian Levitt, economist with OppenheimerFunds in New York. What incentive is there for a bright, capable CEO to come work for Fannie or Freddie as long as the government is the ultimate boss?
To be fair, Fannie Mae and Freddie Mac have cleaned up their balance sheets a bit in the past few years. They have not made the same mistakes in regard to financing bad credit risks as they did during the housing boom. But as long as older loans are a problem, who would want to lead Fannie or Freddie? It's a thankless job. Both Williams and Haldeman were criticized for their salaries. Who needs that grief? It's an untenable position for executives right now. For this reason, Harting went on to write that he thought it was "highly unlikely" that the FASB would impose such new regulations on Fannie and Freddie.
Nonetheless, the thought that Fannie and Freddie may need to raise more capital further spooked Wall Street, which prior to the Lehman report already had plenty of reasons to be worried about Fannie and Freddie as well as other financial stocks. Cannon says that any change in the capital requirements for GSE's would not come from a change in accounting rules, but from careful consideration and gradual change in Congressional regulation.
There is so much anxiety surrounding the housing market, said Seiberg, that "everyone is on edge. See all CNNMoney. Shares of Fannie Mae and Freddie Mac plummeted Monday after a Lehman Brothers report raised fears the two would need to raise more capital. Illinois to sue Countrywide. Home prices post record They're hiring! Both lawsuits allege that the former executives caused the federal mortgage firms to materially misstate their holdings of subprime mortgage loans in periodic and other filings with the Commission, public statements, investor calls, and media interviews.
The suit involving the Fannie Mae executives also includes similar allegations regarding Alt-A mortgage loans. The suit against the former Fannie Mae executives alleges they made misleading statements — or aided and abetted others — between December and August The former Freddie Mac executives are alleged to have made misleading statements — or aided and abetted others - between March and August The SEC's complaint against the former Fannie Mae executives alleges that, when Fannie Mae began reporting its exposure to subprime loans in , it broadly described the loans as those "made to borrowers with weaker credit histories," and then reported — with the knowledge, support, and approval of Mudd, Dallavecchia, and Lund — less than one-tenth of its loans that met that description.
Fannie Mae reported that its year-end Single Family exposure to subprime loans was just 0. Fannie Mae disclosed that its March 31, exposure to Alt-A loans was 11 percent of its portfolio of Single Family loans. The misleading disclosures were made as Fannie Mae's executives were seeking to increase the Company's market share through increased purchases of subprime and Alt-A loans, and gave false comfort to investors about the extent of Fannie Mae's exposure to high-risk loans, the SEC alleged.
In the complaint against the former Freddie Mac executives, the SEC alleged that they and Freddie Mac led investors to believe that the firm used a broad definition of subprime loans and was disclosing all of its Single-Family subprime loan exposure.
Syron and Cook reinforced the misleading perception when they each publicly proclaimed that the Single Family business had "basically no subprime exposure.
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