“The Federal Housing Finance Agency just released the results of the annual stress tests for Fannie Mae and Freddie Mac. Under the severely adverse economic scenario, the companies would need $157.3 billion in capital…

…Before you jump to the conclusion that this number is too high (or too low), let’s put this in context. Fannie Mae has $3.25 trillion in assets and Freddie Mac has $1.95 trillion in assets. That’s $5.2 trillion combined. As a percentage of the total, the $157.3 billion is 3.0%.”, Excerpt from May 2015 Mortgage Industry Newsletter

“Why, post-crisis, would this undisputed fact be allowed to continue unresolved? It was one thing to do so pre-crisis (and pre- Fannie/Freddie taxpayer bailouts), but how can we allow ALL U.S. taxpayers to continue to assume this level of catastrophic risk on behalf of the housing industry and some homeowners? I am an industry veteran and post-crisis I no longer think this is right. What do you think? ”, Mike Perry, former Chairman and CEO, IndyMac Bank

 

Entire Excerpt from May 2015 Mortgage Industry Newsletter:

“Keeping on with agency chatter…

 

The Federal Housing Finance Agency just released the results of the annual stress tests for Fannie Mae and Freddie Mac. Under the severely adverse economic scenario, the companies would need $157.3 billion in capital. Before you jump to the conclusion that this number is too high (or too low), let’s put this in context. Fannie Mae has $3.25 trillion in assets and Freddie Mac has $1.95 trillion in assets. That’s $5.2 trillion combined. As a percentage of the total, the $157.3 billion is 3.0%. This comes on the heels of another interesting story of a leaked Treasury memo. These two things tie together quite nicely actually. The Treasury memo says that a private Fannie and Freddie would need capitalization of 3% to 4% of assets. So, this recent stress test actually confirms that the ratios found in the memo are correct.”

 

Fannie Mae and Freddie Mac remain in conservatorship despite discussions to make changes, write Mark Calabria, director of financial regulation studies at the Cato Institute, and Alex Pollock, resident fellow at the American Enterprise Institute. Practical steps, including ending all the special privileges the mortgage giants enjoy, need to be taken, and then they could be allowed out of conservatorship to operate in an acceptable manner, according to the authors. The Hill/Congress Blog (4/27)””

Posted on May 12, 2015, in Postings. Bookmark the permalink. Leave a comment.

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