Steve Mnuchin says that hopefully he’ll most likely do one thing about Fannie and Freddie within the subsequent 5 weeks
The saga of Fannie Mae and Freddie Mac, highly profitable to the federal government, is now over 12 years old and counting. This is because, despite all of everyone’s pious words about the importance of getting them out of under the thumb of the public, no one seems particularly interested in doing anything to achieve it. Despite the predictably loud, but impotent statements, the current presidential administration does not. Not the incoming one. And certainly not the US Supreme Court.
“Do you believe that a person not in any way affected by this provision is entitled to relief if any provision of a massive law is found to be unconstitutional?” Judge Samuel Alito asked the investor’s attorney, David Thompson…. Justice Sonia Sotomayor said allowing a challenge to an agency action because it affects a company’s share price would be a “fundamental change in the way administrative challenges are handled …”.
[Chief Justice John] Roberts appeared to dismiss investors’ argument that the companies had been “nationalized” and said he checked Fannie and Freddie’s share prices the morning of the argument and found them at $ 2.69 and $ 2.56, respectively were traded.
“Your stocks are not worthless,” said Roberts. “They are worth something, probably based mostly on judgments about the future. Isn’t that what your type of nationalization rhetoric does, rhetoric? “
Now we know Treasury Secretary Steve Mnuchin knows his days in this role are numbered as he does whatever he can to compromise his successor’s ability to deal with the raging tire fire of an economy that he and his boss are leaving behind. Despite the boss’s clear, if absent-minded and nebulous, order to do something about it, Mnuchin seemed in no hurry. That is, until he heard how bad the other side’s case was in front of the Colonels – his finance department is officially opposed to ending the highly lucrative boom by court order.
Speaking to reporters on Wednesday, Mnuchin said he supported changing the companies’ rescue agreements “to steer them in the right direction …”. Mnuchin gave no indication of how far he wanted to go, just said, “There are changes that we will most likely make.”
Even so, it doesn’t sound like his hedge fund buddies like the results.
Mnuchin said, “The only area I think we haven’t made enough progress is in Fannie Mae and Freddie Mac.” He added that he still believed that Congress should pass laws to reform the real estate finance system.
“We’re going to create a blueprint,” Mnuchin said, adding that he has spoken to both Republicans and Democrats for the past few weeks.
The Supreme Court is sending mixed signals for Fannie-Freddie’s investor claims [Bloomberg]
Mnuchin says he “probably” supports changes to Fannie and Freddie [Bloomberg]