Credit Suisse made false statements about the LTVs on at least 2,392 of the 6,884 loans in their mortgage pool, overstating their value by at least 105%. The allegations against Barclays were almost identical.
Not only is FHFA Director Mark Calabria homing in on a roadmap to end the conservatorship of Fannie and Freddie, he clearly believes the exit can take place before the two entities are fully capitalized.
The recap and release of Fannie Mae and Freddie Mac could be a bonanza for investment banking/advisory firms that assist the government. There might be four contracts overall.
The new capital buffer deal has a limited life. At current earnings rates, Fannie will reach the $25 billion buffer cap in about two years, Freddie a little later.
Analyst Richard Bove thinks the new net worth sweep agreement is just a gimmick because the liquidation preference on Treasury’s preferred stock will offset any increase in the GSEs’ capital buffers.