Business as usual at Fannie and Freddie

[Joanne98]

Thomas Lund, Executive Vice President of Fannie Mae, issued the following Statement To Fannie Mae Business Partners:


As you know from recent official statements, Director James Lockhart of the Federal Housing Finance Agency (FHFA) has appointed FHFA as conservator of Fannie Mae and he has also indicated that Fannie Mae is operating “business as usual.”

Accordingly, this action has not altered the manner in which Fannie Mae is interacting and working with our business partners or the processes we use in working with them. In addition, the U.S. Department of the Treasury has agreed to provide up to $100 billion in capital as needed to ensure our company continues to provide additional market stability and liquidity as well as enhance mortgage affordability.

FHFA has announced that existing contracts with Fannie Mae remain in effect and that we continue to have the authority to enter into new contracts. FHFA’s full statement regarding our contracts during the conservatorship is available at www.ofheo.gov. In fact, the conservatorship is specifically designed to enhance our ability to serve the market, and we will be working closely with FHFA and Treasury to ensure operations of our company continue uninterrupted. The 5,700 employees of Fannie Mae are committed to serving the nation’s housing market every day.

As the conservatorship proceeds, we will be updating all of our customers and other stakeholders about changes that affect them.

We value your business and our relationships in the mortgage finance industry greatly, and look forward to maintaining and strengthening them as we work together, with the support of the U.S. government, to sustain the market through this period.
Sincerely,

Tom Lund
Business As Usual

Sorry, I do not have a link to the above. The statement came to me in a PDF sent by "KC".

Fannie Mae (FNM) and Freddie Mac (FRE) have squandered every penny of capital they had. One might have thought that insolvency would have been reason enough to start taking less lending risks instead of continuing on the same foolish path. A reasonable person just might have expected to see a statement of what went wrong and what changes would be made to fix those problems.

But no! Fresh with a $100 billion taxpayer bailout, the very first thing out of Tom Lund's mouth is to inform everyone that nothing has changed, and it's business as usual. "Business as usual" is exactly why we are in this mess in the first place.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

[HamdenRice]

1. "squandered every penny of capital they had" ???

It doesn't help in understanding our current situation to exaggerate. They haven't "squandered every penny of capital they had". If that were true then they wouldn't be losing several billion, but trillions. They got away from their core business which was sound, and got into risky business areas that were not what they were intended to do, and got into trouble.

If you want to know what Fannie and Freddie actually were intended to do, you might want to take a look at this post of mine from last year:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1561876

The language of business as usual, obviously is PR intended to calm the markets. Obviously they are not going to continue doing everything the same because Paulson won't let them.