Thursday, May 11, 2017

Sounds like cash flow accounting

Fannie Mae and Freddie Mac could be forced to retain earnings to stabilize their operations and maintain investor confidence, the head of the U.S. agency regulating the mortgage firms said on Thursday.
Melvin Watt, director of the U.S. Federal Housing Finance Agency, told the Senate Banking Committee he could order Fannie and Freddie to retain future profits as a way to shore up their accounts

"We cannot risk the loss of investor confidence," he said. "FHFA's actions would be taken solely to avoid a draw during conservatorship."
And, of course, these two entities are perfectly capable of managing their own Fed account like any member bank with free entry and exit.  It violates one constitution constraint, the right for senators to steal us into bankruptcy, a right they have never given up.

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