Bloomberg News has a new article out that follows Secretary Mnuchin’s plans to keep Fannie and Freddie under conservatorship. According to the report, the government will make minor changes to capital requirements for the companies, but the “Treasury opposes reducing the government’s ownership stake in Fannie and Freddie.”
The Trump administration is poised to unveil last-minute changes to Fannie Mae and Freddie that would allow the mortgage giants to retain significantly more capital, while leaving many of the thorniest issues on releasing the companies from federal control to President-elect Joe Biden, said four people familiar with the matter.
The revisions — expected to be announced as soon as Thursday — would modify the contracts that govern taxpayers’ backstopping of Fannie and Freddie. They fall far short of freeing the companies from their government conservatorships, something Treasury Secretary Steven Mnuchin vowed to accomplish after President Donald Trump’s 2016 election win. [Bloomberg]
Bloomberg left out a key detail, which Revolver can exclusively report.
Last evening, Mnuchin met with Congresswoman Maxine Waters (D-CA) Senator Patrick Toomey (R-PA) to coordinate his flip-flop on Fannie Freddie conservatorship.
As Revolver News reported months ago, this is a complete reversal from Mnuchin’s previous commitment to end the conservatorship.
The Supreme Court heard Collins v. Mnuchin on Wednesday, December 9th. This important and complicated case will determine the constitutionality of the Federal Housing Finance Agency’s (FHFA) structure. The lawsuit is brought by investors in Fannie Mae and Freddie Mac hoping to reverse the Obama-initiated “100 percent net worth sweep policy,” which effectively funneled all of Fannie and Freddie’s considerable profits into the Treasury. While the Treasury Department is the defendant in the case, the Trump administration is not challenging the appeals court’s finding that the FHFA is unconstitutional, though it still wants to protect the net-worth sweep policies.
This is both bizarre and counter-productive. It is bizarre because Trump’s political appointees at the FHFA have initiated plans to take Freddie and Fannie out of conservatorship, which would likely result in a settlement with Fannie and Freddie’s investors that would end the litigation. The Trump administration’s approach to Collins v Mnuchin is counter-productive because its defense of the “100 percent net worth sweep policy,” if successful, would simply enhance the power and purse of a potential Biden Treasury Department. [Revolver]
Mnuchin’s coordination with Waters and Toomey is especially troubling given how Senator Toomey has sided with the Democrats against Trump in the voter fraud claims in Pennsylvania and called for Trump to resign and face “criminal liability” over the January 6 Protests.
Maxine Waters used her post on the Financial Services Committee to bully banks into deplatforming conservatives and funding left wing groups. These banks are now deplatforming Trump himself.
Deutsche Bank, one of President Donald Trump’s main lenders, plans to distance itself from its best-known client in the wake of last week’s Capitol insurrection, creating a new threat to Trump’s finances once he leaves office.
The German bank will no longer do business with Trump or his company going forward, according to a person familiar with the matter. Trump owes the bank more than $300 million. [Politico]
Waters has called for Trump’s prosecution over the protests, despite previously inciting her supporters to harass and attack Trump officials, saying if you see them in a “restaurant, in a department store, at a gasoline station, you get out and you create a crowd. And you push back on them.”
No doubt, Maxine is thrilled that Mnuchin plans to give away billions of dollars to her allies. And that’s exactly what Mnuchin’s plan would do:
As a bit of background in the case, in 2008, during the financial crisis, the Treasury bailed out Fannie and Freddie on the condition that FHFA would supervise them under a conservatorship to ensure they paid back the government. In 2012, the Obama administration began the so-called 100 percent net worth sweep policy, which effectively transfers all Fannie and Freddie profits to the Treasury. Fannie and Freddie have more than paid off the debt, but the policy continues. The investors in Fannie and Freddie who are suing the government are eager to make a deal to end the conservatorship.
From a purely realpolitik standpoint, the current deal gives the Federal Government billions of dollars with none of the usual constraints from Congress and the ability to negotiate a deal with Fannie and Freddie investors. [Revolver]
Revolver’s original reporting noted that a Senior Administration source told Revolver that Biden’s priorities at Treasury are “Covid, racial justice, and climate change.” And this was even before 70 million Trump supporters were effectively declared domestic terrorists by their own government.
Just imagine what the Biden Administration might do now with the extra billions of dollars of slush fund money that Maxine Waters and Pat Toomey are negotiating, with the complicity of Trump’s appointee Mnuchin himself. The 70 million Americans who voted for Trump have enough to worry about without this development. The President should override his Treasury Secretary and stop the slush fund immediately, for his own sake, the sake of his supporters, and for the sake of our nation.
Revolver News is the homepage of the American people. The Drudge Report no longer has its finger on the pulse of America. We aim to fill that void, and much more. Be sure to bookmark our news feed, make it your home page, and check it out on a daily basis.