Federal Home Loan Mortgage Corp (OTCBB:FMCC) finished the last trading session with a minor gain of 0.45% as it kept trading in a narrow range of $2.24-$2.28. The volume of the day at 1 million was marked lower than the daily average of 2.9 million, reflecting the contracted volatility at the current moment. It has already corrected almost 60% of the entire gains incurred in the early part of the month but no strong bottoming pattern is visible yet. The false breakout from the intermediate base increases the probability of testing the lower end of the range around $1.90-$2.00 levels.
Obama administration officials rejected proposal to release Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Fannie Mae from government control, indicating that things will remain unchanged up to the next presidential elections. For the last one year, a coalition of affordable-housing advocates and investment companies has urged the Obama administration to privatize the two mortgage companies, which have been under conservatorship since being bailed-out during the 2008 financial crisis.
The details
In a series of appearances in recent meeting, Treasury and White House officials opposed calls to release and recapitalize Federal Home and Fannie, stating them misguided. White House housing adviser Mr. Michael Stegman stated that none of them should be misdirected by the increasingly piercing chorus of supporters of recapitalization and release. He added that some of the calls have been led by large investment companies that intend to benefit from such a result. Treasury Secretary Mr. Jacob Lew and his counselor Antonio Weiss rejected recapitalization and release plans.
The impact
The decision cast dark clouds on a fierce lobbying measures by housing advocates and shareholders to convince the administration to cement Federal Home’s and Fannie’s position in the mortgage industry before leaving office. Also, to engaging lobbyists, the coalition’s measures include newspaper editorials and letters to policy makers. The lobbying measures come as legislative calls to restructure the housing-finance system stays halted. A bipartisan bill advocated by the White House never reached the Senate floor.
Federal Home and Fannie were put under conservatorship in September 2008 and obtained $187.5 billion in bailout funds. As part of the agreement, the government obtained preferred stock initially paying a 10% dividend. Later in 2012, the government modified the deal terms, taking almost all of the companies’ profits while not needing a dividend in loss-making quarters. To date, the two firms have compensated the Treasury $239 billion.
