‘Hysteria in Markets Regarding Viability of Fannie, Freddie Is Unfounded,’ Says NAHB
Published: July 14, 2008
By Anuradha Kher, Online News Editor
Washington, D.C.--The Bush administration on Sunday asked Congress to approve a rescue package that would give officials the power to inject billions of federal dollars into the troubled Fannie Mae and Freddie Mac through investments and loans.
“We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets,” Daniel H. Mudd, president and CEO of Fannie Mae said in a statement. “Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future.”
The Federal Reserve has also said that it would make one of its short-term lending programs available to the two companies, Fannie Mae and Freddie Mac. The Fed said that it had made its decision “to promote the availability of home mortgage credit during a period of stress in financial markets.”
Kieran P. Quinn, CMB, chairman of the Mortgage Bankers Association (MBA) applauded the actions outlined by the United States Department of Treasury and the Federal Reserve Board regarding Fannie Mae and Freddie Mac (the GSEs).
"Fannie Mae and Freddie Mac play a critical role in the U.S. housing market. We commend both the Treasury Department and the Federal Reserve on this move as it will help ensure that the two companies can continue to play central roles in stabilizing the mortgage markets.”
Quinn added that this action will ensure that consumers get mortgage credit and it will reassure the capital markets that Freddie and Fannie will continue to play their vital roles providing Americans the opportunity for homeownership and affordable renting housing.
Jerry Howard, executive vice president and CEO of the National Association of Home Builders (NAHB), said, "Fundamental analysis and statements from top federal government officials point out that the hysteria in the markets regarding the viability of Fannie Mae and Freddie Mac is unfounded.”
OFHEO Director James Lockhart, whose agency oversees the financial health of Fannie and Freddie, recently stated that they are well capitalized, have large liquidity portfolios, continued access to the debt market and the flexibility and sound operations needed to support their vital housing mission. Treasury Secretary Henry Paulson concurred, testifying last week before Congress that OFHEO has made clear that Fannie and Freddie are adequately capitalized and that they will continue to play an important role in our housing markets.
"Pundits who have questioned the viability of Fannie and Freddie are not operating on a factual basis, unnecessarily inflaming market fears. We are in an environment where sound analysis appears to have been abandoned,” Howard said.
MHN’s calls to Fannie Mae were not returned.