Efforts to kill Fannie-Freddie may already be dead - News and Current Events | futures.io
futures.io futures trading

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

Efforts to kill Fannie-Freddie may already be dead
Started:March 14th, 2014 (08:38 PM) by kbit Views / Replies:66 / 0
Last Reply:March 14th, 2014 (08:38 PM) Attachments:0

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

Efforts to kill Fannie-Freddie may already be dead

Old March 14th, 2014, 08:38 PM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

Efforts to kill Fannie-Freddie may already be dead

The leadership of the Senate Banking Committee with some fanfare this week released its long-awaited proposal to reform the U.S. housing finance system by dramatically scaling back the government's role and eliminating Fannie Mae and Freddie Mac .

The proposal, from Banking Chairman Tim Johnson, D-S.D., and ranking member Mike Crapo, R-Idaho, does not have formal legislative language yet. And yet it may already be dead.

Whispers around Washington hold that more liberal members of the committee, including Sherrod Brown of Ohio (who may become chairman next year) and Elizabeth Warren of Massachusetts, are lining up in opposition to the bill because they do not believe it does enough to further the goals of expanding affordable housing.

"The GSE (government-sponsored enterprise) 'juggernaut' is mostly smoke & mirrors," one senior Democratic Washington source told me this week. "Brown and Warren are letting people know that it's a non-starter and [Senate Majority Leader] Reid is playing a little Kabuki because his Las Vegas housing market is in the tank and he doesn't want to upset any apple carts during the slow recovery there."

The chances that the full Congress would pass significant housing reform this midterm election year were always fairly slim. House Financial Services Committee Chairman Jeb Hensarling's "PATH Act" would completely eliminate the government role. That bill may never get to the House floor. But if the House were to take up a housing bill it would almost certainly be something Democrats would fully reject.

The Senate Banking goals were thought to be more modest. Lay down a marker for any future housing reform efforts by at least getting a bill out of committee. That could give the party a talking point for the fall-We want to reform housing finance!-without the pain of actually passing anything.

Now even that goal seems like a bridge too far. But not everyone is giving up on the idea that a bill could eventually emerge from the committee. Brown and Warren alone could not stop a bill. They would need to gain critical mass for their opposition, something that's hard to do at the moment with no formal language on the table.

"If the chair and ranking member have 16 plus votes on the banking committee, Brown and Warren are mere bystanders," said a plugged-in D.C. Republican. "If they choose to stay off the deal, the only thing they will control is the timing of when they withdraw or get beaten on their amendments. [Reid], however, holds far, far more power over this bill. On pretty much a unilateral basis, he can stop it cold or rewrite it entirely."

This person added that the true plan for the bill remains possible.

"It's my suspicion the Administration, the Senate Leadership and possibly even the Committee leaders are unified behind simply passing the bill out of the Committee and setting a marker on the subject," he said. "I do not think there is, or ever was, interest in moving the bill through the full Senate."

None of this means the hedge funds that eventually hope to reap huge profits on their Fannie and Freddie shares should rest easy. The sharp drop in the shares this week after the announcement of the Senate Banking proposal was, in fact unwarranted, given the grim future of the bill.

But to cash in, the funds will have to both win their court battle against the government's decision to sweep Fannie and Freddie profits into the U.S. Treasury and get an eventual bill that retains the existing housing finance giants in some form.

Part of the reason there is so little appetite for reforming the government role in housing right now is the big profits the GSEs are providing to Uncle Sam. The government is going to fight hard to keep that money flowing.

And should a housing finance reform measure ever move toward final passage by both houses of Congress next year, it's hard to imagine it will do so in a way that makes homeownership even slightly more difficult by reducing the federal role and simultaneously provide a huge payday to billionaire hedge fund managers. The politics of such a bill would be horrendous and almost guarantee failure.

The status quo-a "too big to fail" housing finance system that threatens the financial system-seems likely to prevail for the foreseeable future.

Efforts to kill Fannie-Freddie may already be dead

Reply With Quote


futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > Efforts to kill Fannie-Freddie may already be dead

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

An Afternoon with FIO trader bobwest

Elite only

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
Regulator outlines new plan for Fannie, Freddie kbit News and Current Events 0 February 21st, 2012 08:00 PM
Fannie, Freddie writedowns too costly: regulator kbit News and Current Events 0 January 23rd, 2012 06:49 PM
Fannie and Freddie, Still the Socialites kbit News and Current Events 0 October 17th, 2011 01:08 PM
Some Big Banks Want to Take Over Role of Fannie, Freddie Quick Summary News and Current Events 0 January 21st, 2011 02:20 PM
Cost of Seizing Fannie and Freddie Surges for Taxpayers Quick Summary News and Current Events 0 June 20th, 2010 08:30 AM

All times are GMT -4. The time now is 02:06 PM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-23 in 0.08 seconds with 20 queries on phoenix via your IP