Foster Deposition Highlight

July 14, 2015 Deposition of Jeff Foster, Senior Policy Advisor at US Treasury 2009 – 2012

Mr. Patterson refers to Pete Patterson of Cooper and Kirk, attorney for plaintiffs

PATTERSON: How did the net worth sweep help achieve the objective of ensuring that the GSEs would be wound down and would not be allowed to return to the market in their prior form?

FOSTER: The net worth sweep and the third — the third amendment supported the wind-down of Fannie Mae and Freddie Mac to allow the size and the scope of the portfolios and guarantee book to be shrunk gradually over time, which would lower/reduce their ability to generate net income, which would reduce their ability to cover fixed income dividend payments and, therefore, the net worth sweep would have supported the execution of that wind-down policy.

PATTERSON: And then it says that feature of the third amendment, I’m assuming says this will help achieve several important objectives, including the objective that we’ve discussed. So I guess my question is, how would moving to the net worth sweep dividend advance the commitment that the GSEs would be wound down and not be allowed to return to the market in their prior form?

FOSTER: So in order to be able to wind down the GSEs in a safe and responsible manner, we needed to be able to reduce — well, Congress or FHFA would have needed to reduce the size and the footprint of the GSEs or Fannie Mae and Freddie Mac’s retained portfolio and guarantee books. That reduction in footprint would reduce their ability to generate net income. Reduce net income generation capacity would reduce its ability to meet any fixed income dividend payments under a variety of — almost under any scenario and, as a result, to be able to support the wind-down, a more flexible dividend structure supported that.

Jeff Foster’s testimony is a clear admission of guilt by clearly stating the purpose of the Third Amendment was to put Fannie and Freddie out of business. 

It is also interesting to see on Mr. Foster’s LinkedIn page that his accomplishment at Treasury was:

“Led policy work to help the housing market recover and reform the housing finance system.”

…he accomplished the housing market recovery and reformed the housing finance system by facilitating the destruction of Fannie and Freddie prior to creating an alternative or replacement system?

Under “Publications” Mr. Foster lists:
Reforming America’s Housing Finance Market
February 2011
White paper Treasury team wrote that continues to be the foundation of housing finance reform

In this paper it states: “Winding Down Fannie Mae and Freddie Mac on a responsible timeline: The Administration will work with FHFA to determine the best way to responsibly reduce Fannie Mae and Freddie Mac’s role in the market and ultimately wind down both institutions, creating the conditions for private capital to play the predominant role in housing finance.”

Is this not further proof that FHFA has not acted independently as mandated by law? Mr. Foster makes clear that the conservator never intended to restore Fannie and Freddie and that FHFA has all along worked hand-in-hand with Treasury to destroy these two privately-owned companies.

What further proof is needed? 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s