Wednesday, November 28, 2012

The Fannie Mae ‘Wind Down’ That Isn’t

The mortgage assets they own are declining, but the overall value of mortgages on their balance sheet has remained about the same.

 By Vern P. McKinley  |November 26, 2012

At the height of the presidential election campaign, the Treasury Department issued a press release called “Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac.” It highlighted a new policy to scale back the pair’s mortgage-investment portfolio at a rate of 15% per year, as opposed to their stated 10% rate. Reports from the Securities and Exchange Commission, however, suggest that these two government-sponsored enterprises—currently under federal conservatorship—may not be shrinking much at all.  The Treasury announcement, coming near the fourth anniversary of the September 2008 government takeover of the mortgage behemoths, was made during an election campaign with a heavy focus on the health of the economy. The impression it left was that the most expensive of the 2008 bailouts was not much of an issue, as the transition back to stability in the mortgage market is well under way.  We’ve since learned that the mortgage market is still troubled…To Read More…. 

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