Ed DeMarco, August 2012…at the time of the Sweep:
“Replacing the current fixed dividend in the PSPAs with a variable dividend based on net worth will help to ensure stability, fully capture financial benefits for taxpayers, and eliminate the need for Fannie Mae and Freddie Mac to continue to borrow from the Treasury Department to pay dividends. As Fannie Mae and Freddie Mac shrink, the continued payment of a fixed dividend could have called into question the adequacy of the financial commitment contained in the PSPAs. In addition, the faster reduction in the retained mortgage portfolio will further reduce risk exposure and simplify the operations of Fannie Mae and Freddie Mac.
These changes provide certainty to Fannie Mae, Freddie Mac and market participants as they continue to perform their critical mission of providing liquidity and stability to the country’s housing market. The steps today are also important as Congress and policymakers contemplate the future of Fannie Mae and Freddie Mac.”
In my post from yesterday…
Ed DeMarco, March 2013, testifying at Congressional hearing:
“I think that they (PSPA) helped in that they provided some assurance to investors in Fannie Mae and Freddie Mac securities that the dividend at Fannie Mae and Freddie Mac would not continue to borrow from the Treasury in order to pay the Treasury with regard to dividends. It also is ensuring that the taxpayer starts to see even more of a return on the support that has been provided and it does not allow for the companies to take their earnings and essentially recapitalize themselves.”
Yada yada yada… “…does not allow for the companies to…recapitalize themselves.” The rest of it is BS…Mr. DeMarco testified to Congress that the Sweep was to prevent recapitalization. “Repaying taxpayers,” “Government’s reward for bailing out the companies,” “Return for explicit guarantees,” etc., etc. …all BS!
The Administration decided to liquidate the companies when they implemented the 3rd Amendment to the PSPA. The problem is they lacked the authority to make this decision!
That’s the admission! Recapitalization should have been Mr. DeMarco’s highest priority but he did the complete opposite. The role of the conservator is “restoring financial safety and soundness” to the companies. The US Treasury is complicit in this conspiracy!
When will justice be served!?