t temporarily authorized the US Treasury to make investments in the GSEs to stabilize their financial condition.
September 6, 2008: the director of the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship run by the FHFA. The move was publically supported by both Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. According to the terms of the conservatorship, in exchange for future support and capital investments of up to US$ 100 billion in each GSE, Fannie and Freddie each issued to the Treasury US $1 billion of senior preferred stock, with a 10% coupon, without cost to the government.
2009: a total of 3,957,643 foreclosures were filed on 2,824,674 properties during the year, up 21 percent from 2008. (A record 2.8 million properties receive foreclosure notices in 2009 RealtyTrac 2009)
2010: An internal Treasury memo between the Treasury memo between Undersecretary Jeffrey Goldstein to Treasury Secretary Geithner recommends a course of action that will “make clear the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the GSEs in the future.” (Gretchen Morgenson, “The Untouchable Profits of Fannie Mae and Freddie Mac,” New York Times, 2/15/14)
August 7, 2012: the US Treasury and the GSEs (Fannie and Freddie) agreed to, but did not enact, what is known as “Third Amendments” to the conservancy action that would, in effect, change the 10% coupon to a 100% coupon – effectively wiping out all other bond and shareholders – a group that includes retirees, pension funds, community banks, and insurance companies.
January 1, 2013: The Third Amendments were enacted as agreed upon on August 7, 2013.
June 25, 2013: US Senators Bob Corker (TN-R) and Mark Warner (VA-D) introduced the Housing Finance Reform and Taxpayer Protection Act of 2013 (S. 1217).
July 22, 2013: PATH Act authored By Representative Jeb Hensarling (TX-R-05) was introduced.
March 9, 2014: US Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) introduced their version of the Housing Finance Reform and Taxpayer Protection Act of 2014 (S. 1217).
November 16, 2014: Fannie Mae and Freddie Mac announced $6 billion dollar profit in third quarter earnings. In total, Fannie Mae has repaid the federal government $134.5 billion on a $116.1 billion loan. Freddie Mac has repaid the federal government $91 billion on a $71.3 billion loan.
February 4, 2016 – Representative Stephen Fincher (R-TN) and Office of Management and Budget Director designate, Representative Mick Mulvaney (R-SC), send a letter to then-Treasury Secretary Jack Lew and FHFA Director Mel Watt highlighting the risks posed to taxpayers by the ongoing Net Worth Sweep. (Rep. Stephen Fincher and Rep. Mick Mulvaney letter to Secretary Jacob Lew and Director Melvin Watt, 2/4/16)
February 12, 2016 – President Obama’s FY 2017 budget proposal accounts for GSE revenues through 2027. (“Final Obama Budget Banks of Fannie and Freddie for Years to Come,” Investors Unite (2/12/16)
February 18, 2016 – On the same day that Freddie Mac announced a $2.2 billion profit for Q4 2015, Mel Watt expressed alarm about the GSEs dwindling capital buffers – a direct result of the Net Worth Sweep – during remarks at the Bipartisan Policy Center. (Melvin L. Watt, “Prepared Remarks of Melvin L. Watt Director of FHFA at the Bipartisan Policy Center,” Federal Housing Finance Agency, 2/18/16)
March 14, 2016 – Investors Unite publishes FHFA and Treasury privilege logs. The logs, which are roughly 1,200 pages in length themselves, detail the roughly 180,000 pages of documents regarding the government’s rational for enacting the Net Worth Sweep, which it is seeking to withhold from the public. (“Government Privilege Logs,” Fannie Freddie Secrets)
April 13, 2016 – Unsealed documents show that government officials anticipated the GSEs’ return to sustained profitability, and knew that the entities were not in a “death spiral,” before implementing the Net Worth Sweep in 2012. (“Unsealed Documents – April 13, 2016,” Fannie Freddie Secrets