$FNMA and $FMCC
Conservatorship vs. Receivership
Words in bold near the end contradict what defendants said in yesterday’s Perry filing…
Congressional Record December 18, 2015 114th Congress, 1st Session Issue: Vol. 161, No. 185 — Daily Edition
https://www.congress.gov/congressional-record...te-section
Section 702 in Division O
Mr. BROWN. Madam President, today I wish to discuss section 702 in
division O of the Omnibus appropriations bill. It is a provision that
would prohibit the Treasury Department
[[Page S8857]]
from selling, transferring or otherwise disposing of the senior
preferred shares of Fannie Mae and Freddie Mac for 2 years.
In 2008, Treasury Secretary Hank Paulson and Federal Housing Finance
Agency Director James Lockhart placed Fannie Mae and Freddie Mac into
conservatorship and created an agreement that gave the Treasury
Department senior preferred shares in both entities. Since that time,
the GSEs helped stabilize the housing market by ensuring that families
had access to 30-year fixed-rate mortgages at reasonable rates and
lenders had access to a functioning secondary market. While the
government was initially forced to inject $188 billion into shoring up
these two agencies, it has since collected $241 billion. Taxpayers have
thus earned $53 billion during the conservatorship.
Mr. SCHUMER. Madam President, will the Senator yield for a question?
I am concerned that someone could read the provision as limiting a
future administration’s authority to end the conservatorship after the
2-year prohibition absent congressional action. Does the provision
prohibit a future administration from taking any action after January
1, 2018, if it is in the best interest of the housing market, taxpayers
or the broader economy?
Mr. BROWN. I will say to my colleague from New York that it does not.
That is not the effect of the language. Any number of decisions could
be made after that date, when a new Congress and a new President will
be in place. Nor does this provision have any effect on the court cases
and settlements currently underway challenging the validity of the
third amendment. As the Senator from Tennessee said yesterday, “this
legislation does not prejudice” any of those cases.
Mr. REID. I associate myself with the comments of the Senator from
Ohio, Mr. Brown. If it turns out to be in the best interest of
borrowers, the economy or to protect taxpayers, the next administration
could elect to end the conservatorship on January 2, 2018. This is the
view of the Treasury Department as well. I would like to submit a
letter written to me on this issue that states that the provision binds
the Treasury only until January 1, 2018, and has no effect after that.
The agreement for this language to be included in the omnibus was
that the prohibition would sunset after 2 years and not create a
perpetual conservatorship. As then-Secretary Paulson described,
conservatorship was meant to be a “time out” not an indefinite state
of being.
Madam President, I ask unanimous consent that the Treasury letter be
printed in the Record at the conclusion of the remarks by Senator
Brown.
Mr. BROWN. Madam President, I thank the Majority Leader. The FHFA and
Treasury Department could have placed the GSEs into receivership if the
intent was to liquidate them. The purpose of a conservatorship is to
preserve and conserve the assets of the entities in conservatorship
until they are in a safe and solvent condition as determined by their
regulator.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Department of the Treasury,
Washington, DC, December 17, 2015.
Hon. Harry Reid,
Democratic Leader, U.S. Senate,
Washington, DC.
Dear Mr. Leader: In response to your request for our view,
the Treasury Department interprets the language of Section
702 of Division O of the Military Construction and Veterans
Affairs and Related Agencies Appropriations Act, 2016, to
mean that subsection (b) imposes a prohibition that is
binding until January 1, 2018. It would not be binding after
that date.
Sincerely,
Anne Wall,
Assistant Secretary for Legislative Affairs.
Conservatorship vs. Receivership
Words in bold near the end contradict what defendants said in yesterday’s Perry filing…
Congressional Record December 18, 2015 114th Congress, 1st Session Issue: Vol. 161, No. 185 — Daily Edition
https://www.congress.gov/congressional-record...te-section
Section 702 in Division O
Mr. BROWN. Madam President, today I wish to discuss section 702 in
division O of the Omnibus appropriations bill. It is a provision that
would prohibit the Treasury Department
[[Page S8857]]
from selling, transferring or otherwise disposing of the senior
preferred shares of Fannie Mae and Freddie Mac for 2 years.
In 2008, Treasury Secretary Hank Paulson and Federal Housing Finance
Agency Director James Lockhart placed Fannie Mae and Freddie Mac into
conservatorship and created an agreement that gave the Treasury
Department senior preferred shares in both entities. Since that time,
the GSEs helped stabilize the housing market by ensuring that families
had access to 30-year fixed-rate mortgages at reasonable rates and
lenders had access to a functioning secondary market. While the
government was initially forced to inject $188 billion into shoring up
these two agencies, it has since collected $241 billion. Taxpayers have
thus earned $53 billion during the conservatorship.
Mr. SCHUMER. Madam President, will the Senator yield for a question?
I am concerned that someone could read the provision as limiting a
future administration’s authority to end the conservatorship after the
2-year prohibition absent congressional action. Does the provision
prohibit a future administration from taking any action after January
1, 2018, if it is in the best interest of the housing market, taxpayers
or the broader economy?
Mr. BROWN. I will say to my colleague from New York that it does not.
That is not the effect of the language. Any number of decisions could
be made after that date, when a new Congress and a new President will
be in place. Nor does this provision have any effect on the court cases
and settlements currently underway challenging the validity of the
third amendment. As the Senator from Tennessee said yesterday, “this
legislation does not prejudice” any of those cases.
Mr. REID. I associate myself with the comments of the Senator from
Ohio, Mr. Brown. If it turns out to be in the best interest of
borrowers, the economy or to protect taxpayers, the next administration
could elect to end the conservatorship on January 2, 2018. This is the
view of the Treasury Department as well. I would like to submit a
letter written to me on this issue that states that the provision binds
the Treasury only until January 1, 2018, and has no effect after that.
The agreement for this language to be included in the omnibus was
that the prohibition would sunset after 2 years and not create a
perpetual conservatorship. As then-Secretary Paulson described,
conservatorship was meant to be a “time out” not an indefinite state
of being.
Madam President, I ask unanimous consent that the Treasury letter be
printed in the Record at the conclusion of the remarks by Senator
Brown.
Mr. BROWN. Madam President, I thank the Majority Leader. The FHFA and
Treasury Department could have placed the GSEs into receivership if the
intent was to liquidate them. The purpose of a conservatorship is to
preserve and conserve the assets of the entities in conservatorship
until they are in a safe and solvent condition as determined by their
regulator.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Department of the Treasury,
Washington, DC, December 17, 2015.
Hon. Harry Reid,
Democratic Leader, U.S. Senate,
Washington, DC.
Dear Mr. Leader: In response to your request for our view,
the Treasury Department interprets the language of Section
702 of Division O of the Military Construction and Veterans
Affairs and Related Agencies Appropriations Act, 2016, to
mean that subsection (b) imposes a prohibition that is
binding until January 1, 2018. It would not be binding after
that date.
Sincerely,
Anne Wall,
Assistant Secretary for Legislative Affairs.
