Is This Man Good or Bad News for Fannie Mae and Freddie Mac Investors?

Mel Watt

Shares of Fannie Mae and Freddie Mac had a wild ride in 2013, as both ended the year up nearly 1000% as investors regained confidence that shareholders may ultimately receive a share of the companies' profits. Now, changes are brewing atop Fannie and Freddie's conservator, the FHFA. Mel Watt, a lifetime Democrat, is now leading the agency and could make some big changes. 

In this segment of The Motley Fool’s financials-focused show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson are joined Motley Fool One analyst Morgan Housel to discuss how Watt could potentially be a good and bad thing for shareholders.

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  • Report this Comment On January 11, 2014, at 10:08 PM, maestrolindo wrote:

    The continued conservatorship of both the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation as well as the more recent Sweep Amendment are the biggest scams going on in the United States at the moment

    Fannie Mae and Freddie Mac are the scapegoats of the 2008 housing crisis due to congressional policies aimed at reducing underwriting standards, banks capitalizing on the opportunity to push toxic loans, and new home owners with unrealistic expectations.

    Here we are, six years later. The two companies are massively profitable and have paid back all the money lent to the Treasury. Yet, they are still in conservatorship and due to the government changing the rules in 2012 with the Sweep Amendment, cannot build capital.

    I find it inappropriate on a personal level for two private companies and their common shareholders to be used as cash cows to pay for decades of piss poor financial planning on the part of our government. Like many others I lost a lot of my retirement money in 2008 because of this situation and would like to benefit from these companies recovering. But this goes far beyond that on two separate levels.

    I am no legal expert but this situation reeks of violating the Fifth Amendment of the United States Constitution, “..nor shall private property be taken for public use, without just compensation”. I would like to see the United States Constitution upheld. Fannie Mae and Freddie Mac are being treated like mining companies in Venezuela.

    We furthermore do not need a second social experiment going on in the United States right now. Fannie Mae and Freddie Mac work and there is no reason to reinvent the wheel. I am currently skeptical about the Affordable Health Care Act; a failure here and a failure with housing reform will bring the United States to it’s knees when the largest percent of it’s population is entering retirement.

    Where does The Motley Fool stand with respect to our elected officials upholding the United States Constitution or tampering with our economy at a time when an unprecedented number of Americans are retiring?

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