White House Rejects Fairholme Fannie-Freddie Plan

Nov 21 2013 | 11:36am ET

There will be no hedge-fund-backed recapitalization of Fannie Mae and Freddie Mac, the White House said yesterday.

Gene Sperling, the director of the National Economic Council, said that such a restructuring would not lead to greater stability in the U.S. mortgage market because it would not address Fannie and Freddie's major role in mortgage finance. Sperling did not directly address a proposal last week from Fairholme Capital Management, but made it apparent it was a non-starter.

"I want to make clear our administration believes the risks are simply too great that this would re-create the problems of the past," which led to a $188 billion bailout of the companies.

The White House has previously said it would move forward with plans to wind down Fannie and Freddie. Any recapitalization would require Congressional approval, which does not appear to be forthcoming.

Fairholme last week proposed recapitalizing the companies using preferred shares, an approach backed by Pershing Square Capital Management. In July, Fairholme joined Perry Capital in suing the U.S. Treasury Department for seizing the companies' profits.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

The London Whale saga is a twist on the typical rogue trader story as the rogue trader recognized the error of his ways and was prepared to take his medicine but was instructed by superiors to “defe...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.