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Obama Punts on Fannie and Freddie in State of the Union Speech

thestreet.com | January 30, 2014

By Dan Freed

NEW YORK (TheStreet) --Fannie Mae (FNMA_) and Freddie Mac (FMCC_) reform efforts were notably absent from President Obama's State of the Union speech Tuesday night, an omission that is likely to disappoint parties looking to dismantle the housing giants.

"By not mentioning Fannie Mae and Freddie Mac, we think he signaled that the issue is not a priority for the Administration," wrote KBW Washington analyst Brian Gardner in a report published shortly after the speech Tuesday night.

Obama scarcely mentioned housing at all during the speech. He stated merely that "the most important investment many families make is their home," and asked Congress to "send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations."

Home ownership currently is heavily subsidized by the government, and while many members of Congress and President Obama himself at times have indicated they want to reduce those subsidies, most are afraid to act for fear of crashing the still-fragile U.S. economy.

"Keeping the dream of homeownership alive," implies a continued government subsidy, while protecting taxpayers from footing the bill implies either larger capital cushions for Fannie and Freddie or shifting the risk to private entities that would be very conservatively capitalized or somehow would not grow too big to require a bailout if they failed.

Despite the paucity of details offered by the President, the Financial Services Roundtable -- Wall Street lobbying group -- picked up on his statement to make one of its own.

"It is encouraging the President called for action on the critical issue of housing finance reform," said Tim Pawlenty, CEO of FSR. "Reforming Fannie and Freddie so that taxpayers are no longer on the hook is critical and the time to act is now."

It is mildly interesting that the FSR argued for "reforming" Fannie and Freddie, while the President had said in a speech in August that he wanted to wind them down.

But only mildly. Notwithstanding legislative reform proposals in both houses of Congress, substantive action appears to be many years off.


Back to January 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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