December 28, 2009Brief Holiday Update With Congress and the nation preoccupied with the holidays, the Treasury announced on Thursday that it would be providing Fannie Mae and Freddie Mac unlimited financial support for the next three years, thus providing the end-game that accompanies the Federal Reserve's massive purchase of the securities of these agencies. The Treasury's press release notes: “At the time the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship in September 2008, Treasury established Preferred Stock Purchase Agreements (PSPAs) to ensure that each firm maintained a positive net worth. Treasury is now amending the PSPAs to allow the cap on Treasury's funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years.” After a long deliberation, I've decided to defer my remarks about this until after the holidays. The implications are likely to be sufficiently long-term in nature that we can wait until then, and my impression is that none of us really want to contemplate their full impact just now. Beyond noting my deep concern, I don't intend to dampen anyone's holiday. To read the rest of this commentary, go here
(c) Hussman Funds
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