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New Bill To Let Fannie Mae, Freddie Mac Recapitalize Just In Time For 7th Anniversary Of Conservatorship

New Bill To Let Fannie Mae, Freddie Mac Recapitalize Just In Time For 7th Anniversary Of Conservatorship by Investors Unite

Legislation being drafted in the U.S. House by Rep. Mick Mulvaney (R-S.C.) would let Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) “once again build up their capital cushions,” reports Politico Pro. This is a great development. IU’s own Tim Pagliara says he’s extremely pleased this is being undertaken, and that the Third Amendment Sweep continues to put taxpayers at risk by depriving the GSEs of capital that would be a buffer against another economic downturn. The legislation would be a good partner with Rep. Marsha Blackburn’s legislation to put the money siphoned off under the Sweep into a separate holding account instead of getting lost in the U.S. Treasury’s general fund.

We also note that the timing of a Mulvaney bill couldn’t be more propitious. Last month we marked the third anniversary of the Net Worth Sweep, and this week marks the seventh anniversary of the conservatorship. We might submit the conservatorship to the Guinness Book of World Records since it has to be the longest one in history. Conservatorships, by definition, are meant to be short-term and temporary whereas this one has turned into a semi-permanent state.

The Politico article doesn’t give details of the new legislation except to note that it could have...


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