Steven Mnuchin’s Legacy For Fannie Mae And Freddie Mac

Treasury Secretary Steven Mnuchin will leave office soon, and the clock is ticking on getting Fannie Mae and Freddie Mac out of conservatorship. This is a time for Mnuchin to look back at his legacy, and for Fannie Mae and Freddie Mac, to decide whether he wants to align himself with the perjury that has gone before or whether he wants to be part of the solution to the nation’s housing finance problems.

Supreme Court to hear case about Fannie Mae, Freddie Mac

The Supreme Court will take up one of the cases involving Fannie Mae and Freddie Mac starting on Dec. 9. Tim Pagliara of CapWealth Advisors questions what Mnuchin will do, given the fact that the case involving the government-sponsored enterprises has gone all the way to the Supreme Court. He said that from talking to legal scholars and attorneys who are involved in the case, it seems clear that the government is going to lose.

"They're going to lose on the issue of whether or not you can create a loan for a troubled company in a statutory conservatorship that they can never repay and violate the basic principles of conserve and protect, which is what their mandate was under the statute," Pagliara told ValueWalk in an interview.

He drew a comparison between the GSE court case and the church ban in New York, which the Supreme Court threw out. He noted that the church ban suggested that it was not safe to go to church due to COVID-19, but it was safe to pick up a bottle of wine.

The absurdity of Fannie's, Freddie's case involving Mnuchin

Pagliara added that the Supreme Court essentially "mocked [Andrew] Cuomo over the inconsistent application of steps for public safety." He said five justices on the Supreme Court are very no nonsense, and he expects them to point out how absurd the situation involving Fannie Mae and Freddie Mac is.

"They're going to finally say the same things we've all been thinking since 2012," Pagliara said. "That it's absurd; you can't create a statutory remedy like the third amendment sweep that perpetually keeps companies in conservatorship."

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