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UnAnswered
Questions for Stanley Sporkin
#1 Why is the Sporkin fox in the Fannie Mae hen house?
Stanley Sporkin has been retained
by the Office of Federal Housing Enterprise Oversight (OFHEO) to assist
in its duties overseeing Fannie Mae -- one of the largest issuers of mortgage
backed securities and related derivatives in the world.
Why should we care? All
Americans are impacted by the health and well being of Fannie Mae's operation
- as homeowner, as investor and as taxpayers.
- The entire US mortgage market
is currently dependent on several private corporations that enjoy special
governmental credit support (called Government Sponsored Enterprises
or GSEs). Because of their size, the value of our homes may decrease
if a GSE becomes troubled.
- Many pension funds, mutual
funds and money market funds include Fannie Mae securities. Hence, the
retirement savings of many Americans and global citizens, as well as
the resources of global financial institutions, are now vested in Fannie
Mae's well being.
- If government resources
are called upon to forestall or support Fannie Mae in a bankruptcy or
reorganization, our tax dollars and taxpayer-backed government credit
could be diverted to fund Fannie Mae's liabilities and to subsidize
the US mortgage markets.
- If one GSE is troubled,
it could impact the viability and health of the others, including Freddie
Mac and the Federal Home Loan Bank System, as well as Ginnie Mae, a
governmental corporation at the Department of Housing and Urban Development
(HUD).
The following questions, organized
around Judge Sporkin's historical areas of responsibility, are intended
to illuminate the background and experience that Judge Sporkin brings
to the task of assisting the Bush Administration in the oversight and
regulation of Fannie Mae.
This information should be
useful to investors in US mortgage securities who are assessing credit
ratings and pricings of Fannie Mae, Freddie Mac, FHFB, Ginnie Mae and
other related mortgage and homebuilding stocks, bonds and derivatives
or the investment, mutual funds, pension funds and money market funds
that hold them.
These questions have been sent
to Judge Sporkin. We will post
any response we receive.
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